Koskela, Erkki; Stenbacka, Rune - Institute for the Study of Labor (IZA) - 2003
We study employment, employee effort, wages and profit sharing when firms face stochastic revenue shocks and when base … bargaining power of the trade union and it has effort-enhancing and wage-moderating effects. We show that higher profit sharing … reduces equilibrium unemployment under circumstances with sufficiently ‘rigid’ labour market institutions, i.e. sufficiently …