Efficiency Aspects of Profit-Sharing Systems versus Wage Systems

James Markusen

American Journal of Agricultural Economics, 1975, vol. 57, issue 4, 601-612

Abstract: Some theoretical and practical bases for choosing between wage and profit-sharing reward structures are considered. The analysis suggests that simple wage systems have theoretical advantages over simple profit-sharing systems with regard to the optimal provision of labor effort. The opposite conclusion occurs with regard to the optimal use of capital. Furthermore, simple profit-sharing systems are better able to deal with certain practical problems that arise in large-scale agricultural production. Finally, a complex type of profit sharing exists which has the same theoretical advantages as the wage system plus practical advantages as well.

Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:57:y:1975:i:4:p:601-612.

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