Profit-Sharing and Optimal Labour Contracts

Simon Anderson and Michael Devereux

Canadian Journal of Economics, 1989, vol. 22, issue 2, 425-33

Abstract: This paper examines the effect of introducing profit-sharing arrangements into union-firm contracts. It is shown that if bargaining is efficient (using the generalized Nash bargain), profit-sharing has no effect on the bargaining outcome. This is true both when the profit-sharing restriction is exogenously imposed by legislation and when profit sharing is part of the optimal contract. However, if the initial bargaining process is inefficient because direct negotiation on total employment is precluded, an optimal contract can use profit sharing to establish the efficient bargaining outcome. Both types of bargaining models have been employed in the literature.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://links.jstor.org/sici?sici=0008-4085%2819890 ... PAOLC%3E2.0.CO%3B2-G (text/html)
only available to JSTOR subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:22:y:1989:i:2:p:425-33

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Zhiqi Chen

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().