The Effect of Employee Stock Ownership on Wage and Employment Bargaining

25 Pages Posted: 16 Jun 2001

See all articles by Rick Harbaugh

Rick Harbaugh

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Indiana University - Department of Economics

Date Written: 2000

Abstract

When workers can bargain over wages and employment, standard insider-outsider models predict underemployment if the number of insiders is small and overemployment if the number of insiders is large. For instance, a union will restrict employment growth in an expanding firm and oppose layoffs in a contracting firm. This paper shows that employee stock ownership can solve both problems and that the necessary ownership share is often relatively small. The results are compared with related results in the literatures on profit-sharing and labor-managed firms.

Keywords: ESOPs, bargaining, profit sharing

JEL Classification: J33, J51

Suggested Citation

Harbaugh, Rick, The Effect of Employee Stock Ownership on Wage and Employment Bargaining (2000). Available at SSRN: https://ssrn.com/abstract=272595 or http://dx.doi.org/10.2139/ssrn.272595

Rick Harbaugh (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-2777 (Phone)
812-855-3354 (Fax)

HOME PAGE: http://www.bus.indiana.edu/riharbau/

Indiana University - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

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