ABSTRACT
This chapter aims to review existing evidence on the prevalence and growth of profit sharing, and to present new evidence on the growth of deferred profitsharing plans in the 1980s. It provide a tour through the empirical work on the employment effects of profit sharing and presents original research on the employment effects of deferred profit sharing in US publicly traded corporations. Profit sharing has been of interest for its potential both in enhancing productivity and in stabilizing employment and output. Evidence on profit sharing in the US generally indicates that it has become more prevalent in the 1980s. If profitsharing payments are really “disguised wages,” increases in those payments should have roughly the same employment consequences as increases in wages. More generally, apart from the stability theory, the growth of profit sharing is an intriguing development. The average compensation in a profitsharing firm would include a compensating differential for income risk, which may be positive or negative.
