When Workers Share in Profits: Effort and Responses to Shirking

Richard B. Freeman ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper summarizes new evidence from the "Shared Capitalism" Project on the extent towhich workers' earnings depend on the performance of their firm or work group in the USand advanced European countries and on the impact of sharing arrangements on economicbehavior. The evidence shows that: 1) a large and growing proportion of workers are coveredby shared capitalism through worker profit-sharing, bonuses, or worker ownership of shares;2) outcomes for workers and firms are higher under shared capitalism than under other workand pay arrangements; and 3) that worker co-monitoring helps overcome the free riderproblem that arises when part of workers pay depends on the productivity and effort of allworkers.

Keywords: Profit sharing; efficiency wages (search for similar items in EconPapers)
JEL-codes: J41 J24 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eec, nep-lab and nep-ltv
Date: 2008-07
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Journal Article: When Workers Share in Profits: Effort and Responses to Shirking (2008)
Journal Article: When Workers Share in Profits: Effort and Responses to Shirking (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0882

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