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Public Profit Sharing
Author(s) -
Schöb Ronnie
Publication year - 2002
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/1467-6435.00200
Subject(s) - economics , profit sharing , social security , unemployment , labour economics , wage , negotiation , shareholder , profit (economics) , scope (computer science) , public policy , short run , macroeconomics , market economy , microeconomics , finance , economic growth , corporate governance , programming language , political science , computer science , law
Many countries suffer from persistently high unemployment rates. The scope for labour market reforms is often limited to measures that hurt neither shareholders nor workers. This paper develops a policy proposal, which allows the government to reduce wage costs without changing the income positions as determined in the process of wage negotiations. It is shown that the introduction of public profit sharing, i.e., substituting profit shares for social security contributions, can boost employment both in the short run and the long run. Calibrating the model and comparing the results with recent empirical findings about the impact of labour taxation confirm the theoretical findings.