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When workers share in profits: effort and responses to shirking

By Richard B. Freeman

Abstract

This paper summarizes new evidence from the “Shared Capitalism” Project on the extent to which workers’ earnings depend on the performance of their firm or work group in the US and advanced European countries and on the impact of sharing arrangements on economic behavior. The evidence shows that: 1) a large and growing proportion of workers are covered by shared capitalism through worker profit-sharing, bonuses, or worker ownership of shares; 2) outcomes for workers and firms are higher under shared capitalism than under other work and pay arrangements; and 3) that worker co-monitoring helps overcome the free rider problem that arises when part of workers pay depends on the productivity and effort of all workers

Topics: HN Social history and conditions. Social problems. Social reform, HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2008
OAI identifier: oai:eprints.lse.ac.uk:28499
Provided by: LSE Research Online

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