Explicit versus Implicit Profit Sharing and the Determination of Wages: Microeconomic Evidence from the U.K.

Bhargava, Sandeep and Jenkinson, Tim (1995) Explicit versus Implicit Profit Sharing and the Determination of Wages: Microeconomic Evidence from the U.K. Labour, 9 (1). pp. 73-95.

Abstract

This paper considers the claim that explicit profit sharing reduces the marginal cost of labour This is contrasted with the view that implicit profit sharing occurs through wage bargaining Using a microeconomic data set from the UK we find no evidence that the introduction of profit sharing reduces base wages and hence the marginal cost of labour However firm profitability is found to have a positive effect on wages which supports the hypothesis of implicit profit sharing through wage bargaining These findings suggest that it is hard to justify the favourable tax treatment of profit related pay found in the UK

Item Type: Article
Keywords: profit sharing; pay; earnings; salaries; finance
Subject(s): Finance
Private equity
Centre: Oxford Private Equity Institute
Date Deposited: 10 Jan 2012 15:11
Last Modified: 22 Feb 2017 15:57
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/1386

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