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A Neo-Kaleckian Model of Profit Sharing, Capacity Utilization and Economic Growth

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  • Gilberto Tadeu Lima

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Abstract

This paper sets forth a Neo-Kaleckian model of capacity utilization and growth with distribution featuring a profit-sharing arrangement. While a given proportion of firms compensate workers with only a base wage, the remaining proportion do so with a base wage and a share of profits. Consistent with the empirical evidence, workers hired by profit-sharing firms have a higher productivity than their counterparts in base-wage firms. While a higher profit-sharing coefficient raises capacity utilization and growth irrespective of the distribution of compensation strategies across firms, a higher frequency of profit-sharing firms does likewise only if the profit-sharing coefficient is sufficiently high.

Suggested Citation

  • Gilberto Tadeu Lima, 2011. "A Neo-Kaleckian Model of Profit Sharing, Capacity Utilization and Economic Growth," Working Papers, Department of Economics 2011_05, University of São Paulo (FEA-USP).
  • Handle: RePEc:spa:wpaper:2011wpecon05
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    File URL: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-999X.2011.04146.x/abstract
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    References listed on IDEAS

    as
    1. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
    2. Arindrajit Dube & Richard B. Freeman, 2010. "Complementarity of Shared Compensation and Decision-Making Systems: Evidence from the American Labor Market," NBER Chapters,in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 167-199 National Bureau of Economic Research, Inc.
    3. Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
    4. Mark Setterfield (ed.), 2010. "Handbook of Alternative Theories of Economic Growth," Books, Edward Elgar Publishing, number 12814.
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    Cited by:

    1. Gilberto Tadeu Lima & Jaylson Jair Silveira, 2014. "Macroeconomic Performance under an Evolutionary Dynamics of Profit Sharing," Working Papers, Department of Economics 2014_27, University of São Paulo (FEA-USP).
    2. Kamel Helali & Maha Kalai & Thouraya Boujelbene, 2016. "Short-run decomposition of profit efficiency and its relationship with the Tunisian manufacturing capacity utilisation," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 8(1), pages 38-51.

    More about this item

    Keywords

    profit sharing; productivity; capacity utilization; growth;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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