Working Papers, Hanken School of Economics
Determinants of Profit Sharing in the Finnish Sector
() and Almas Heshmati
Abstract: This study investigates the role of factors that determine
individual employee’s and firms participation in profit sharing schemes.
Using a large panel data of Finnish employees for the period 1996-2000 we
analyse individual and workplace characteristics that make firms employ
profit sharing schemes and workers susceptible of receiving profit sharing
bonuses. In particular two links between profit sharing schemes and workers
performance have been analysed. First, in looking at profit sharing as an
incentive device the results show a positive link between firm size and
monitoring costs. Second, we find that younger individuals with higher mean
salary and capacity to bear risk are more susceptible to profit sharing
schemes. The industrial sector in which the individual is employed is also
an important determinant factor. We find weak evidence of a relationship
between performance of firms and employment of profit sharing schemes at
the industrial sector level.
Keywords: individual; firm; profit sharing; panel data; (follow links to similar papers)
32 pages, November 27, 2003
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