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By Marija Ugarkovic

Marija Ugarkovic examines even if monetary participation can give a contribution to a extra equitable distribution of source of revenue and wealth, no matter if it may possibly raise employment and bring about stronger corporation functionality. the writer makes use of a large-scale German institution panel and proves the helpful effect on productiveness and employment. furthermore, she indicates that revenue sharing doesn't bring about a discount of base wages yet is paid as well as general wages. It turns into glaring that revenue sharing has extra confident results for giant corporations than for small and medium-sized businesses.

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By Marija Ugarkovic

Marija Ugarkovic examines even if monetary participation can give a contribution to a extra equitable distribution of source of revenue and wealth, no matter if it may possibly raise employment and bring about stronger corporation functionality. the writer makes use of a large-scale German institution panel and proves the helpful effect on productiveness and employment. furthermore, she indicates that revenue sharing doesn't bring about a discount of base wages yet is paid as well as general wages. It turns into glaring that revenue sharing has extra confident results for giant corporations than for small and medium-sized businesses.

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A simple comparison of firms with and without profit sharing that does not take account of this selectivity effect would thus be misleading. In fact, the majority of studies ignore this issue. Before presenting new evidence based on data from the IAB Establishment Panel, the following section briefly introduces the problem of selectivity and presents various estimators that deal with this problem. Microeconometric Evaluation Methods The aim of our analysis is to assess the impact of an introduction of profit sharing on several outcome variables as compared to the hypothetical situation of nonintroduction and is thus a situation typical for an evaluation.

G. g. g. , 2005a). 9 Different methods that deal with selectivity and their (dis-)advantages are discussed in further detail in chapter 4. Prior Empirical Studies on the Impact of Profit Sharing 31 Lawler do not account for selectivity bias. Shepard’s study, on the other hand, is based on data from 20 firms in the chemicals industry only, 9 of which had implemented a profit sharing scheme. S. establishments using fixed effects estimation finds positive but insignificant results. For the United Kingdom, Wadhwani and Wall (1990) investigate the impact of profit sharing on various outcome variables based on ten-year data of 101 primarily large manufacturing firms where 21 have operated a profit sharing scheme at some time.

S. data has been conducted by Kruse (1993). Kruse uses panel data from 1975-1990 on 253 sharing and 247 non-sharing firms and finds that profit sharing increases sales as well as value-added by more than 4 percent. In order to address selection bias, he uses a variety of techniques such as Heckman’s two-step estimator or the instrumental variable approach which, however, do not substantially change the results. As opposed to the majority of studies, his panel contains not only information on the existence of a profit sharing plan, but also information on when the plan was adopted.

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