Market imperfections may cause firms and workers to under-invest in specific training. This paper shows that profit sharing may be a suitable instrument to enhance specific training investments, either by enhancing wage °exibility or by increasing the returns to training. As a result, profit sharing not only increases productivity by means of an effort effect, but also by increased training investments. Furthermore, the results suggest that older workers' employability can be improved if a profit-related remuneration is paid.
|Place of Publication||Tilburg|
|Number of pages||28|
|Publication status||Published - 2007|
|Name||CentER Discussion Paper|
- profit-related pay
- labor productivity
- labor mobility