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Profit Sharing and Training

Author

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  • Kraft, Kornelius

    (TU Dortmund)

  • Lang, Julia

    (TU Dortmund)

Abstract

We analyze the impact of profit sharing on the share of workers receiving training. An effect is plausible because: 1) profit sharing is a credible commitment by firms to reward firm-specific skills acquired by formal or informal training, 2) profit sharing may reduce turnover and increase the returns to training, 3) a common payment for the whole workforce leads to peer group pressure to participate in training courses and raises incentives to help co-workers. In order to eliminate possible selectivity effects, we combine a matching approach with difference-in-differences. We identify the proportion of employees participating in profits and differentiate profit sharing according to the percentage of the workers covered by such remuneration schemes. Using German establishment data we find that profit sharing only has a significant effect on training intensity if the majority of the workforce benefits from it.

Suggested Citation

  • Kraft, Kornelius & Lang, Julia, 2011. "Profit Sharing and Training," IZA Discussion Papers 6118, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6118
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    1. Christos Bilanakos & Colin P. Green & John S. Heywood & Nikolaos Theodoropoulos, 2017. "Do Dominant Firms Provide More Training?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 67-95, February.
    2. Jyh‐Bang Jou & Tan (Charlene) Lee, 2021. "Uncertainty, hiring and firing costs, and the determinants of profit‐sharing rules," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 185-197, January.

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    More about this item

    Keywords

    profit sharing; training; matching;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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