THE EFFECTS OF PROFIT-SHARING ON EMPLOYMENT, WAGES, STOCK RETURNS AND PRODUCTIVITY - EVIDENCE FROM UK MICRODATA

Profit-sharing (PS) has, recently, captured the imagination of policy makers and academics alike. In this paper, we attempt to provide empirical evidence by using a micro-data set on UK firms, some of whom operated a profit-sharing scheme. We test this proposition, both, directly by using an employment equation, and, less directly, by using a stock returns equation. The more traditional argument for PS is that it leads to higher productivity, either as an incentive scheme, or by encouraging a closer identification of employees with the companies for which they work. We attempt to investigate this here by estimating firm-level production functions. Section I contains a discussion of the relevant theory, while the data, methodology and results are presented in Section II. Some conclusions are provided in Section III. -from Authors