This paper presents a model showing that profit sharing is subject to the 1 IN problem in the case of independent worker productivity but not in the case of interdependent worker productivity. This implies the role of firm size on the likelihood of profit sharing will differ by the nature of the underlying technology. We test this implication using German establishment data and using a proxy for interdependent worker productivity. The results conform to the theory showing that firm size is associated with reduced profit sharing use when technology is independent but not when technology is interdependent. (C) 2009 Elsevier B.V. All rights reserved.
|Number of pages||13|
|Journal||Journal of Economic Behavior & Organization|
|Publication status||Published - 1 Aug 2009|
- Team production
- 1/N problem
- Profit sharing