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Profit, productivity, and profit-sharing
Article
Chang, CH, Bjornstad, DJ. (1993). Profit, productivity, and profit-sharing .
17(1), 103-114. 10.1007/BF02920086
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Chang, CH, Bjornstad, DJ. (1993). Profit, productivity, and profit-sharing .
17(1), 103-114. 10.1007/BF02920086
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cited authors
Chang, CH; Bjornstad, DJ
authors
Chang, Chun-Hao
abstract
This study is an investigation of the effect of profit-sharing on labor productivity. When monitoring labor performance is costly for management, a regular wage/salary contract is insufficient to induce profit-maximizing behavior from the worker. The authors demonstrate that when this profit-maximizing behavior can be induced only through profit-sharing, a linear profit-sharing program will increase productivity and the welfare of both management and labor. The benefit from profit-sharing is increasing up to the point where the utility of additional income is offset by the negative utility of extraordinary effort (working harder or providing higher quality work). The income effect, i.e., the change in negative utility of extraordinary effort given a change in income, can potentially either increase or decrease the point at which the income-effort tradeoff-reaches zero. © 1993 Springer.
publication date
March 1, 1993
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Digital Object Identifier (DOI)
https://doi.org/10.1007/bf02920086
Additional Document Info
start page
103
end page
114
volume
17
issue
1