Journal Article

Profit sharing and its effect on income distribution and output: a Kaleckian approach

Hiroaki Sasaki

in Cambridge Journal of Economics

Volume 40, issue 2, pages 469-489
Published in print March 2016 | ISSN: 0309-166X
Published online February 2015 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/beu087
Profit sharing and its effect on income distribution and output: a Kaleckian approach

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  • General Aggregative Models
  • Macroeconomics: Consumption, Saving, Production, Employment, and Investment
  • Labour-Management Relations, Trade Unions, and Collective Bargaining

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This study investigates how profit sharing influences the economy by using a Kaleckian model. Unlike existing research, I endogenise the profit share. The analysis shows that profit sharing decreases or increases the equilibrium capacity utilisation rate depending on whether the productivity-enhancing effect of profit sharing is weak or strong. Moreover, the presented numerical simulations show that the profit-sharing effects on income distributions differ according to the relative strength of the productivity-enhancing effect of profit sharing.

Keywords: Profit sharing; Income distribution; Regular and non-regular employment; Wage gap; Cyclical fluctuations; E12; E25; J53

Journal Article.  8350 words.  Illustrated.

Subjects: General Aggregative Models ; Macroeconomics: Consumption, Saving, Production, Employment, and Investment ; Labour-Management Relations, Trade Unions, and Collective Bargaining

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