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Productivity, earnings, and profit sharing — An econometric analysis of alternative models

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Abstract

The theoretical status of the relationship between productivity, wages, and profit sharing (PS) is poor. Only some alternative hypotheses can be formulated. From these explanations six different econometric models are derived. Using data of the German Socio-Economic Panel the models are estimated and tests and indicators are employed to choose the best model. Our investigation speaks in favour of hybrid simultaneous Tobit models where the level of profit sharing is positively correlated with productivity which induces positive wage effects on the one hand. But on the other hand the level of wages is also relevant to the question whether a firm introduces or decides to continuePS and which amount ofPS should be paid.

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Authors and Affiliations

  1. Institut für Quantitative Wirtschaftsforschung, Universität Hannover, Wunstorferstraße 14, 3000, Hannover 91, Germany

    Olaf Hübler

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  1. Olaf Hübler
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What is “obvious” is not always true and introspection is a notoriously unreliable guide to empirical magnitudes. Blinder (1990, p.2)

For helpful comments I thank Jörg Breitung, Knut Gerlach and two referees.

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Hübler, O. Productivity, earnings, and profit sharing — An econometric analysis of alternative models. Empirical Economics 18, 357–380 (1993). https://doi.org/10.1007/BF01205408

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  • DOI: https://doi.org/10.1007/BF01205408

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