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

摘要

Economic theory presents two main views on the effect of profit-sharing on wages. First, profitsharingmay substitute for base wages and have a neutral effect on total compensation. Second, itmay be interpreted as an “efficiency wage” that increases total compensation. Existing empiricalliterature does not allow a determination of which of these two arguments is valid. This paperattempts to tackle this issue in the case of France for the 2000-2007 period. Based on a differencein-differencesselection model, our results suggest that profit-sharing has a neutral effect on totalcompensation. Several years after its implementation within firms, profit-sharing lowers basewages, which are offset by profit-sharing bonuses.