Journal article

Publication year: 2011

Pages: 91-105

Journal: Applied Economics Quarterly

Volume number: 57

Issue number: 2

DOI Link: https://doi.org/10.3790/aeq.57.2.91

Publisher: Duncker & Humblot

Abstract: 

Efficiency wage effects of profit sharing are combined with option values related to stochastic future profit variations. These option effects occur if the workers' profit share is fixed by long-term contracts. The Pareto-improving optimal level of the sharing ratio is calculated for two different scenarios: (1) the firm can unilaterally decide, the expected present value of net profits is maximised; (2) the sharing ratio is based on bilateral Nash bargaining. Since a larger variation of revenues implies a higher redistribution of future profits, the inclusion of expected variations results in a lower worker's profit ratio in both scenarios.

Harvard Citation style: Göcke, M. (2011) Efficiency Wages and Negotiated Profit-Sharing under Uncertainty, Applied Economics Quarterly, 57(2), pp. 91-105. https://doi.org/10.3790/aeq.57.2.91

APA Citation style: Göcke, M. (2011). Efficiency Wages and Negotiated Profit-Sharing under Uncertainty. Applied Economics Quarterly. 57(2), 91-105. https://doi.org/10.3790/aeq.57.2.91