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Title:Profit Sharing and Relative Consumption PDF Logo
Authors:Goerke, Laszlo
Issue Date:2012
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jahrhunderts - Session: Welfare Economics and Externalities G20-V3
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:D62
J22
J33
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jh.

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