Profit-Sharing and Wages: An Empirical Analysis Using French Data Between 2000 and 2007

Abstract : Economic theory presents two main views on the effect of profit-sharing on wages. First, profitsharing may substitute for base wages and have a neutral effect on total compensation. Second, it may be interpreted as an “efficiency wage” that increases total compensation. Existing empirical literature does not allow a determination of which of these two arguments is valid. This paper attempts to tackle this issue in the case of France for the 2000-2007 period. Based on a differencein-differences selection model, our results suggest that profit-sharing has a neutral effect on total compensation. Several years after its implementation within firms, profit-sharing lowers base wages, which are offset by profit-sharing bonuses.
Keywords : wages profit-sharing
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Submitted on : Friday, April 17, 2015 - 4:50:11 PM
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Noélie Delahaie, Richard Duhautois. Profit-Sharing and Wages: An Empirical Analysis Using French Data Between 2000 and 2007. 2015. ⟨halshs-01143491⟩

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