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Profit-Sharing and Wages: An Empirical Analysis Using French Data Between 2000 and 2007

Listed author(s):
  • Noélie Delahaie
  • Richard Duhautois

Economic theory presents two main views on the effect of profit-sharing on wages. First, profitsharing may substitute for base wages and have a neutral effect on total compensation. Second, it may be interpreted as an “efficiency wage” that increases total compensation. Existing empirical literature does not allow a determination of which of these two arguments is valid. This paper attempts to tackle this issue in the case of France for the 2000-2007 period. Based on a differencein-differences selection model, our results suggest that profit-sharing has a neutral effect on total compensation. Several years after its implementation within firms, profit-sharing lowers base wages, which are offset by profit-sharing bonuses.

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File URL: http://www.tepp-repec.eu/RePEc/files/teppwp/TEPP_wp_15_03-nd-rd.pdf
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Paper provided by TEPP in its series TEPP Working Paper with number 2015-03.

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Date of creation: 2015
Handle: RePEc:tep:teppwp:wp15-03
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