Profit Sharing and Employment Stability

Lutz Bellmann and Iris Möller

Schmalenbach Business Review (sbr), 2010, vol. 62, issue 1, 73-92

Abstract: We investigate the effect of profit sharing on establishments’ hirings, layoffs, and quits. Our principal argument is that profit sharing increases wage flexibility and also aligns wages with a changing marginal revenue product. Because employment stability makes their human capital investment more profitable and increases labor productivity and morale, firms might choose to adopt profit-sharing schemes. Our empirical analysis is based on the IAB establishment Panel. We estimate cross-section time-series regressions and apply state-of-the-art matching estimators that explicitly account for observed and unobserved heterogeneity. in the regressions we find a significantly positive effect of profit sharing on hirings and a significantly negative effect on layoffs, but the results obtained by the matching estimators are not significant.

Keywords: Compensation; Incentives; Labor Turnover; Matching; Profit Sharing (search for similar items in EconPapers)
JEL-codes: C15 C25 J24 J33 J63 M52 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.vhb.de/sbr/pdfarchive.html (text/html)

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:sbr:abstra:v:62:y:2010:i:1:p:73-92

Access Statistics for this article

Schmalenbach Business Review (sbr) is currently edited by Wolfgang Ballwieser

More articles in Schmalenbach Business Review (sbr) from LMU Munich School of Management Contact information at EDIRC.
Bibliographic data for series maintained by sbr ( this e-mail address is bad, please contact ).