Performance Pay, Training and Labor Mobility

Anne Gielen

No 2932, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Market imperfections may cause firms and workers to under-invest in specific training. This paper shows that profit sharing may be a suitable instrument to enhance specific training investments, either by enhancing wage flexibility or by increasing the returns to training. As a result, profit sharing not only increases productivity by means of an effort effect, but also by increased training investments. Furthermore, the results suggest that older workers' employability can be improved if a profit-related remuneration is paid.

Keywords: profit-related pay; training; labor productivity; labor mobility (search for similar items in EconPapers)
JEL-codes: J24 J62 M52 M53 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-07
New Economics Papers: this item is included in nep-bec and nep-lab
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Citations: View citations in EconPapers (6)

Published - revised version published as 'Profit Sharing for Increased Training Investments' in: British Journal of Industrial Relations. 2011, 49 (4), 643-665.

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