Arbeitspapier
Profit sharing and relative consumption
Traditionally, it has been argued that profit sharing can increase employment and welfare because it lowers marginal labour costs without reducing total cost or 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. Mandatory profit sharing reduces wages. If the rise in profit income keeps total income constant, profit sharing will have no income but only a substitution effect. Since labour supply is excessive, profit sharing constitutes a Pareto-improvement.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 3970
- Classification
-
Wirtschaft
Externalities
Time Allocation and Labor Supply
Compensation Packages; Payment Methods
- Subject
-
labour supply
profit sharing
relative consumption
status concerns
- Event
-
Geistige Schöpfung
- (who)
-
Goerke, Laszlo
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2012
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Goerke, Laszlo
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2012
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