The Fixed Wage Puzzle: Why Profit Sharing Is So Hard to Implement

Jürgen Jürgen Jerger () and Jochen Michaelis ()
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Jürgen Jürgen Jerger: Osteuropa-Institut, Regensburg (Institut for East European Studies)

No 283, Working Papers from Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies)

Abstract: It is well known that profit sharing arrangements Pareto-dominate fixed wage contracts. Share agreements are (far) less than ubiquitous, however. This paper offers a solution of this „fixed wage puzzle“ by adopting a perspective of bounded rationality. We show that share arrangements that fulfill „plausible“ constraints are not generally acceptable to both firms and unions.

Pages: 13
Date: 2010-04
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Related works:
Journal Article: The fixed wage puzzle: Why profit sharing is so hard to implement (2011)
Working Paper: The Fixed Wage Puzzle: Why Profit Sharing Is So Hard to Implement (2010)
Working Paper: The Fixed Wage Puzzle: Why Profit Sharing Is So Hard to Implement (2010)
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