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

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  • Noélie Delahaie
  • Richard Duhautois

Abstract

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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  • Noélie Delahaie & Richard Duhautois, 2015. "Profit-Sharing and Wages: An Empirical Analysis Using French Data Between 2000 and 2007," TEPP Working Paper 2015-03, TEPP.
  • Handle: RePEc:tep:teppwp:wp15-03
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