Lump-Sums, Profit Sharing, and the Labor Costs in the Union Sector
This paper documents the increase in the use of lump-sum payments and profit sharing plans in union contracts in the 1980s, and evaluates the extent to which these innovations may have contributed to moderation in the growth of labor costs, and increased pay flexibility. We find evidence that lump-sum and profit sharing arrangements reduced labor cost growth at both the aggregate and firm level. But the evidence linking these plans to labor cost flexibility is mixed; although the evidence suggests that profit sharing plans may be associated with greater flexibility at the firm level, there is no evidence that lump-sum plans increase flexibility at either the firm or aggregate level.
|Date of creation:||Feb 1991|
|Date of revision:|
|Publication status:||published as Linda A. Bell and David Neumark. "Lump-sum Payments and Profit-sharing Plans in the Union Sector of the United States Economy" The Economic Journal, Vol. 103, No. 418 (May, 1993), pp. 602-619|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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- Martin L. Weitzman, 1984.
"The Simple Macroeconomics of Profit Sharing,"
357, Massachusetts Institute of Technology (MIT), Department of Economics.
- Robert J. Gordon, 1988. "U.S. Inflation, Labor's Share, and the Natural Rate of Unemployment," NBER Working Papers 2585, National Bureau of Economic Research, Inc.
- Freeman, Richard B. & Weitzman, Martin L., 1987.
"Bonuses and employment in Japan,"
Journal of the Japanese and International Economies,
Elsevier, vol. 1(2), pages 168-194, June.
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