Profit Sharing and Training

38 Pages Posted: 28 Nov 2011

See all articles by Kornelius Kraft

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Julia Lang

affiliation not provided to SSRN

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We analyze the impact of profit sharing on the share of workers receiving training. An effect is plausible because: 1) profit sharing is a credible commitment by firms to reward firm-specific skills acquired by formal or informal training, 2) profit sharing may reduce turnover and increase the returns to training, 3) a common payment for the whole workforce leads to peer group pressure to participate in training courses and raises incentives to help co-workers. In order to eliminate possible selectivity effects, we combine a matching approach with difference-in-differences. We identify the proportion of employees participating in profits and differentiate profit sharing according to the percentage of the workers covered by such remuneration schemes. Using German establishment data we find that profit sharing only has a significant effect on training intensity if the majority of the workforce benefits from it.

Keywords: profit sharing, training, matching

JEL Classification: C14, J33, M52, J24

Suggested Citation

Kraft, Kornelius and Lang, Julia, Profit Sharing and Training. Available at SSRN: or

Kornelius Kraft (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Julia Lang

affiliation not provided to SSRN

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