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A NEO-KALECKIAN MODEL OF PROFIT SHARING, CAPACITY UTILIZATION AND ECONOMIC GROWTH

Authors
Journal
Metroeconomica
0026-1386
Publisher
Wiley Blackwell (Blackwell Publishing)
Publication Date

Abstract

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.

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