Empirical work in labour economics has focused on rent sharing as an explanation for the observed correlation in cross-sections between wages and profitability. The alternative explanation of risk sharing between workers and employers has not been tested. Using a unique panel data set for four...

Randomized experiments provide policy relevant treatment effects if there areno spillovers between participants and nonparticipants. We show that thisassumption is violated for a Danish activation program for unemployed workers.Using a difference-in-difference model we show that the...