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Profit Sharing, Capital Formation and the NAIRU
Author(s) -
Jerger Jurgen,
Michaelis Jochen
Publication year - 1999
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00156
Subject(s) - economics , unemployment , nairu , remuneration , profit (economics) , wage , labour economics , monetary economics , macroeconomics , microeconomics , finance , unemployment rate
This paper reconsiders the impact of different remuneration systems on aggregate employment. Contrary to common wisdom on this topic, we show that the switch from a fixed wage economy to a share economy results in lower aggregate unemployment. An additional innovation of this paper is the endogeneity of the capital stock decision of the firm, which enables us to assess and reject the common “disincentive‐to‐invest” criticism of a share economy.