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Does profit-sharing work in a centrally-planned economy? Evidence from the Chinese state industries

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  • Shujie Yao

Abstract

Many studies indicate that profit-sharing is an effective incentive to boost productivity of firms in the western economies such as USA, UK and Germany. Whether a similar incentive scheme can work in a centrally-planned economy like China has not been well researched. China introduced a profit-sharing and bonus-payment scheme in the state-owned enterprises (SOEs) from 1979 in an attempt to reform the state industries. Using a modified CES production function in a non-linear simultaneous system, this study aims to estimate the impact of such a scheme on enterprise performance. It reveals that both labour quality and bonus incentive played an important role in raising SOEs' productivity

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  • Shujie Yao, 1995. "Does profit-sharing work in a centrally-planned economy? Evidence from the Chinese state industries," Applied Economics Letters, Taylor & Francis Journals, vol. 2(4), pages 126-129.
    • Handle: RePEc:taf:apeclt:v:2:y:1995:i:4:p:126-129
    DOI: 10.1080/758529819
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    References listed on IDEAS

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    Cited by:

    1. Meng, Xin & Kidd, Michael P., 1997. "Labor Market Reform and the Changing Structure of Wage Determination in China's State Sector during the 1980s," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 403-421, December.
    2. Xin Meng & Frances Perkins, 1996. "Behavioural Differences among Chinese Firms From the Perspective of Earnings Determination," Departmental Working Papers 1996-09, The Australian National University, Arndt-Corden Department of Economics.

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