Profit Sharing and Relative Consumption

Laszlo Goerke

VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century from Verein für Socialpolitik / German Economic Association

Abstract: Traditionally, it has been argued that profit sharing can increase employment and welfare because it lowers marginal labour costs without reducing labour income. In this paper, we show that profit sharing can also represent a Pareto-improvement if labour supply is excessive due to relative consumption effects. This is the case because mandatory profit sharing reduces wages and raises the workers' profit income, thereby mitigating excessive labour supply incentives.

JEL-codes: D62 J22 J33 (search for similar items in EconPapers)
Date: 2012
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https://www.econstor.eu/bitstream/10419/66064/1/VfS_2012_pid_254.pdf (application/pdf)

Related works:
Journal Article: Profit sharing and relative consumption (2013)
Working Paper: Profit Sharing and Relative Consumption (2012)
Working Paper: Profit Sharing and Relative Consumption (2012)
Working Paper: Profit Sharing and Relative Consumption (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc12:66064

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