Profit Share Labour Arrangements in Competitive Markets

This paper explores the concept of profit sharing as a prospective source of labour income. The paper suggests a paradigm shift: a synthesis of differing perspectives in wage formation to redefine the concept of labour income. The proposed arrangements attempt to conceptualise the productive capacity of human capital. The rearrangement of labour income disassociates the basic wage from the wage premium. Furthermore, it keeps the labour-cost-to-total-cost ratio constant: the basic wage is categorised as a fixed cost, whereas the wage premium is categorised as a variable cost. Finally, some comparative statics results are derived