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Profit Sharing and its Effect on Income Distribution and Output: A Kaleckian Approach

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  • Sasaki, Hiroaki

Abstract

This study investigates how profit sharing influences the economy by using a Kaleckian model. Unlike existing research, I endogenise the profit share. The analysis shows that profit sharing decreases or increases the equilibrium capacity utilisation rate depending on whether the productivity-enhancing effect of profit sharing is weak or strong. Moreover, the presented numerical simulations show that the profit-sharing effects on income distributions differ according to the relative strength of the productivity-enhancing effect of profit sharing.
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Suggested Citation

  • Sasaki, Hiroaki, 2013. "Profit Sharing and its Effect on Income Distribution and Output: A Kaleckian Approach," CCES Discussion Paper Series 50, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    • Handle: RePEc:hit:ccesdp:50
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    References listed on IDEAS

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    1. Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Do Workers Gain by Sharing? Employee Outcomes under Employee Ownership, Profit Sharing, and Broad-Based Stock Options," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 257-289, National Bureau of Economic Research, Inc.
    2. Weitzman, Martin L, 1987. "Steady State Unemployment under Profit Sharing," Economic Journal, Royal Economic Society, vol. 97(385), pages 86-105, March.
    3. Luigi L. Pasinetti, 1962. "Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(4), pages 267-279.
    4. Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 1(3), pages 215-239, September.
    5. Mark Setterfield (ed.), 2002. "The Economics of Demand-Led Growth," Books, Edward Elgar Publishing, number 1864.
    6. Mark Setterfield (ed.), 2010. "Handbook of Alternative Theories of Economic Growth," Books, Edward Elgar Publishing, number 12814.
    7. Srinivas Raghavendra, 2006. "Limits to Investment Exhilarationism," Journal of Economics, Springer, vol. 87(3), pages 257-280, April.
    8. Mario Cassetti, 2003. "Bargaining power, effective demand and technical progress: a Kaleckian model of growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(3), pages 449-464, May.
    9. Sasaki, Hiroaki & Matsuyama, Jun & Sako, Kazumitsu, 2013. "The macroeconomic effects of the wage gap between regular and non-regular employment and of minimum wages," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 61-72.
    10. Peter Skott, 2010. "Growth, Instability and Cycles: Harrodian and Kaleckian Models of Accumulation and Income Distribution," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 5, Edward Elgar Publishing.
    11. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
    12. Weitzman, Martin L, 1985. "The Simple Macroeconomics of Profit Sharing," American Economic Review, American Economic Association, vol. 75(5), pages 937-953, December.
    13. Gilberto Tadeu Lima, 2012. "A Neo‐Kaleckian Model Of Profit Sharing, Capacity Utilization And Economic Growth," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 92-108, February.
    14. Hiroaki Sasaki, 2013. "Cyclical growth in a Goodwin–Kalecki–Marx model," Journal of Economics, Springer, vol. 108(2), pages 145-171, March.
    15. Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
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    Cited by:

    1. Shogo Ogawa, 2019. "Dynamic analysis of a disequilibrium macroeconomic model with dual labor markets," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 525-550, July.
    2. Sasaki, Hiroaki & Asada, Yasukuni, 2020. "Quantifying Goodwin Growth Cycles with Minimum Wage Shares," MPRA Paper 99926, University Library of Munich, Germany.
    3. Sasaki, Hiroaki & Mizutani, Aya, 2024. "Do the Economic Policies of Japan's "New Form of Capitalism" Create a Virtuous Cycle of Growth and Distribution?," MPRA Paper 121692, University Library of Munich, Germany.
    4. Parui, Pintu, 2021. "The Macroeconomic Effects of Financialization and the Wage Gap between Blue and White Collar Workers," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 416-443.
    5. Sasaki, Hiroaki, 2018. "タイトル：カレツキアン・モデルの基本骨格――短期モデルと長期モデル―― [The Basic Framework of the Kaleckian Model of Growth and Distribution: Short-run Model and Long-run Model]," MPRA Paper 88986, University Library of Munich, Germany.
    6. Ryunosuke Sonoda & Hiroaki Sasaki, 2019. "Differences in wage-determination systems between regular and non-regular employment in a Kaleckian model," Review of Keynesian Economics, Edward Elgar Publishing, vol. 7(3), pages 341-360, July.
    7. Sasaki, Hiroaki & Asada, Yasukuni & Sonoda, Ryunosuke, 2024. "Effects of Minimum Wage Share and Wage Gap Reduction on Cyclical Fluctuation: A Goodwin Approach," MPRA Paper 121695, University Library of Munich, Germany.

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    More about this item

    Keywords

    profit sharing; income distribution; regular and non-regular employment; wage-gap; cyclical fluctuations; demand-led growth;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights

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