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.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 3970

Klassifikation
Wirtschaft
Externalities
Time Allocation and Labor Supply
Compensation Packages; Payment Methods
Thema
labour supply
profit sharing
relative consumption
status concerns

Ereignis
Geistige Schöpfung
(wer)
Goerke, Laszlo
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2012

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Goerke, Laszlo
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2012

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