TY  - RPRT
        AU  - Goerke, Laszlo
        TI  - Profit Sharing and Relative Consumption
        PY  - 2012/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 6925
        UR  - https://www.iza.org/index.php/publications/dp6925
        AB  - Traditionally, it has been argued that profit sharing can increase employment and welfare because it lowers marginal labour costs without reducing total cost or labour income. In this paper, we show that profit sharing can also represent a Pareto-improvement if labour supply is excessive due to relative consumption effects. Mandatory profit sharing reduces wages. If the rise in profit income keeps total income constant, profit sharing will have no income but only a substitution effect. Since labour supply is excessive, profit sharing constitutes a Pareto-improvement.
        KW  - relative consumption
KW  - profit sharing
KW  - labour supply
KW  - status concerns
        ER  -