6533b7d7fe1ef96bd1267a9e

RESEARCH PRODUCT

Profit Sharing the Firm-Size Wage Premium

Mika MalirantaJaakko PehkonenSampo PehkonenMatthias Strifler

subject

media_common.quotation_subject05 social sciencesGeography Planning and DevelopmentWagewagesPrivate sectorMonopsonyProfit (economics)yrityksetfirm-sizeMicroeconomicsProfit sharingpalkatkoko0502 economics and businessFor profitEconomicsprofit sharing050207 economicsta512voitonjako050205 econometrics Demographymedia_commonPanel data

description

This study analyzes the relationships among wages, firm size, and profit sharing schemes. We develop a simple theoretical model and explore the relationship empirically using high-quality panel data. The theoretical model shows that the firm-size wage premium decreases in the presence of profit sharing. The empirical results based on rich matched employee-employer data for private sector wage earners in Finland show that the firm-size wage premium is modest, and it becomes negligible when we account for profit sharing and covariates describing assortative matching and monopsony behavior. The analysis suggests that profit sharing schemes embody effects of firm-specific unobservables that raise productivity, support rent sharing, and boost wages.

yearjournalcountryeditionlanguage
2017-02-23Labour
10.1111/labr.12092https://doi.org/10.1111/labr.12092