Profit-Sharing and Meade's Discriminating Labour-Capital Partnerships: A Review Article

Sushil Wadhwani

Oxford Economic Papers, 1987, vol. 39, issue 3, 421-42

Abstract: Professor Meade has argued that the discriminating labor-capital pa rtnerships (DLCPs) might not only help cure stagflation, but are to be preferred to Weitzman-type profit-sharing schemes. This paper argu es that: (1) Once we endogenize wages, DLCPs might not affect unemplo yment; (2) the multitier pay structure implied by DLCPs may not be op timal from the perspective of either firms or workers; (3) the effect of DLCPs on productivity is ambiguous; and (4) the case for subsidiz ing DLCPs is far from conclusive, especially given the possibility th at greater decentralization of wage decisions can make an economy mor e prone to stagflation. Copyright 1987 by Royal Economic Society.

Date: 1987
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