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Do Employees Profit from Profit Sharing? Evidence from Canadian Panel Data

Author

Listed:
  • Long, Richard J.

    () (University of Saskatchewan)

  • Fang, Tony

    () (Memorial University of Newfoundland)

Abstract

Using panel data from a large sample of Canadian establishments, this paper examines whether employee earnings increase, decrease, or do not change in the period subsequent to adoption of profit sharing, relative to establishments that do not adopt profit sharing. Our research contributes to knowledge by utilizing longitudinal analysis to assess the effects of profit sharing adoption on employee earnings growth within a carefully constructed sample of Canadian establishments, and by assessing both cash real earnings growth and total real earnings growth, while controlling for a wide array of variables that may affect these results. On average, employees in Canadian establishments that adopted profit sharing during 1999-2001 appeared to benefit from the introduction of profit sharing, in terms of both their cash real earnings growth and total real earnings growth, in the five-year span following introduction of profit sharing. This advantage was both statistically and practically significant, adding about 15 percentage points to real employee earnings growth over the five-year period, a period during which employee earnings growth was generally modest.

Suggested Citation

  • Long, Richard J. & Fang, Tony, 2012. "Do Employees Profit from Profit Sharing? Evidence from Canadian Panel Data," IZA Discussion Papers 6749, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6749
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    References listed on IDEAS

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    1. Hart, Robert A & Hubler, Olaf, 1991. "Are Profit Shares and Wages Substitute or Complementary Forms of Compensation?," Kyklos, Wiley Blackwell, vol. 44(2), pages 221-231.
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    Cited by:

    1. Jaylson Jair da Silveira & Gilberto Tadeu Lima, 2017. "Employee Profit Sharing and Labor Extraction in a Classical Model of Distribution and Growth," Working Papers, Department of Economics 2017_02, University of São Paulo (FEA-USP).
    2. Long, Richard J. & Fang, Tony, 2013. "Profit Sharing and Workplace Productivity: Does Teamwork Play a Role?," IZA Discussion Papers 7869, Institute for the Study of Labor (IZA).
    3. Noélie Delahaie & Richard Duhautois, 2015. "Profit-Sharing and Wages: An Empirical Analysis Using French Data Between 2000 and 2007," Working Papers halshs-01143491, HAL.
    4. repec:bla:labour:v:31:y:2017:i:2:p:153-173 is not listed on IDEAS
    5. repec:fep:journl:v:28:y:2017:i:1:p:1-9 is not listed on IDEAS
    6. Emmanuel Petrakis & Panagiotis Skartados, 2018. "Strategic Profit–Sharing in a Unionized Differentiated Goods Duopoly," Working Papers 1801, University of Crete, Department of Economics.
    7. Noélie Delahaie & Richard Duhautois, 2013. "L'impact des dispositifs collectifs de partage des bénéfices sur les rémunérations en France. Une analyse empirique sur la période 1999-2007," Working Papers halshs-00967479, HAL.
    8. Leila Baghdadi & Rihab Bellakhal & Marc-Arthur Diaye, 2016. "Financial Participation: Does the Risk Transfer Story Hold in France?," British Journal of Industrial Relations, London School of Economics, vol. 54(1), pages 3-29, March.
    9. Tony Fang, 2016. "Profit sharing: Consequences for workers," IZA World of Labor, Institute for the Study of Labor (IZA), pages 225-225, January.
    10. Petr Petera & Jana Fibírová, 2015. "Basic Approaches to Profit-Sharing and Ideas for Utilization," Český finanční a účetní časopis, University of Economics, Prague, vol. 2015(3), pages 97-117.
    11. Gilberto Tadeu Lima & Jaylson Jair da Silveira, 2018. "Macrodynamic Implications of Employee Profit Sharing as Effort Elicitation Device," Working Papers, Department of Economics 2018_02, University of São Paulo (FEA-USP).

    More about this item

    Keywords

    firm-worker linked survey; employee earnings; profit sharing plans; Canada;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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