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Profit sharing, labour share and financial structure

Author

Listed:
  • Kenshiro Ninomiya

    (Shiga University)

  • Hiroyuki Takami

    (Oita University)

Abstract

In this paper, we study the effects of the Profit-Sharing rule on an oligopolistic economy. Many believed that the Japanese economy was strong because Japan adopted the Profit-Sharing rule (or the Japanese management system) in the 1980s. However, Japan was trapped in a prolonged recession after the collapse of the bubble economy in the 1990s. The Japanese management system and its regulated financial system have come under criticism as factors of the crisis. We derive a condition that a firm and its union adopt the Profit-Sharing rule voluntarily and construct a macrodynamic model of financial instability. We demonstrate in this study that the Profit-Sharing rule in Japan further stabilises the economy when the financial structure of the economy is already stable.

Suggested Citation

  • Kenshiro Ninomiya & Hiroyuki Takami, 2018. "Profit sharing, labour share and financial structure," Evolutionary and Institutional Economics Review, Springer, vol. 15(1), pages 89-111, June.
    • Handle: RePEc:spr:eaiere:v:15:y:2018:i:1:d:10.1007_s40844-017-0090-5
    DOI: 10.1007/s40844-017-0090-5
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    References listed on IDEAS

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    Cited by:

    1. Vikram Kumar, 2019. "Profit Shares as Virtual Equity: Short-Run Isomorphism of Share & Wage Systems," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(7), pages 1-45, July.

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    More about this item

    Keywords

    Financial structure; Profit-Sharing rule; Labour share; Wage- and profit-led regimes; Bargaining power of unions;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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