Premium
A NEO‐KALECKIAN MODEL OF PROFIT SHARING, CAPACITY UTILIZATION AND ECONOMIC GROWTH
Author(s) -
Lima Gilberto Tadeu
Publication year - 2012
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2011.04146.x
Subject(s) - profit sharing , economics , wage , profit (economics) , microeconomics , capacity utilization , labour economics , industrial organization , finance
This paper sets forth a Neo‐Kaleckian model of capacity utilization and growth with distribution featuring a profit‐sharing arrangement. While a given proportion of firms compensate workers with only a base wage, the remaining proportion do so with a base wage and a share of profits. Consistent with the empirical evidence, workers hired by profit‐sharing firms have a higher productivity than their counterparts in base‐wage firms. While a higher profit‐sharing coefficient raises capacity utilization and growth irrespective of the distribution of compensation strategies across firms, a higher frequency of profit‐sharing firms does likewise only if the profit‐sharing coefficient is sufficiently high.