European Business Schools Librarian's Group
ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School
No DR 04011: Legal Profit-Sharing: Shifting the Tax Burden in a Dual Economy
François Contensou ()
Additional contact information
François Contensou: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 50105, 95021 CERGY-PONTOISE CEDEX , FRANCE,
Abstract: What are the consequences of laws imposing profit-sharing rates in the compensation of all forms of labor, when only a limited share of the productive sector is really making profit ? This problem is examined in the case of competitive labor markets, when firms of the profitable sector are facing a predetermined participation constraint. The proposed model details how legal profit-sharing contracts offer a form of evasion from wage-based social contributions in permitting substitution of wages with contingent claims on profits. Labor contracts are examined in a context in which effort is monitored or in which free-riding effects thwart the incentive effects of profit-sharing.
Keywords: Profit-sharing; Incentives; Labor contract
23 pages, August 2004
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