Profit Sharing, Separation and Training

Lancaster University Management School Working Paper No. 2007/031

32 Pages Posted: 17 Aug 2007 Last revised: 27 Jul 2009

See all articles by Colin P. Green

Colin P. Green

Department of Economics

John S. Heywood

University of Wisconsin at Milwaukee

Multiple version iconThere are 2 versions of this paper

Date Written: July 24, 2009

Abstract

Theory presents two channels through which profit sharing can increase worker training. First, it directly increases training by alleviating hold-up problems and/or encouraging co-workers to provide training. Second, it indirectly increases training by reducing worker separation and increasing training investment’s amortization period. This paper provides the first attempt at separately identifying these two channels. We confirm a strong direct effect but also identify a weaker, more tenuous indirect effect. This suggests that profit sharing’s influence on training is unlikely to operate primarily through its reduction on separations while simultaneously presenting the first evidence confirming the prediction of an indirect causation.

Keywords: profit shares, performance pay, training, turnover

JEL Classification: M52, M53, J63

Suggested Citation

Green, Colin P. and Heywood, John S., Profit Sharing, Separation and Training (July 24, 2009). Lancaster University Management School Working Paper No. 2007/031, Available at SSRN: https://ssrn.com/abstract=1007683 or http://dx.doi.org/10.2139/ssrn.1007683

Colin P. Green (Contact Author)

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John S. Heywood

University of Wisconsin at Milwaukee ( email )

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