Profit-Sharing and Meade's Discriminating Labour-Capital Partnerships: A Review Article.

Abstract

Professor Meade has argued that the discriminating labor-capital pa rtnerships (DLCPs) might not only help cure stagflation, but are to be preferred to Weitzman-type profit-sharing schemes. This paper argu es that: (1) Once we endogenize wages, DLCPs might not affect unemplo yment; (2) the multitier pay structure implied by DLCPs may not be op timal from the perspective of either firms or workers; (3) the effect of DLCPs on productivity is ambiguous; and (4) the case for subsidiz ing DLCPs is far from conclusive, especially given the possibility th at greater decentralization of wage decisions can make an economy mor e prone to stagflation. Copyright 1987 by Royal Economic Society.