Working Paper: NBER ID: w14225
Authors: Douglas L. Kruse; Joseph R. Blasi; Rhokeun Park
Abstract: Between one-third and one-half of employees participate directly in company performance through profit sharing, gainsharing, employee ownership, or stock options. This flies in the face of concerns about the free rider problem and worker risk aversion in group incentives, and raises many questions about the effects on firms and workers. This paper lays out the major reasons we may see such "shared capitalism" plans, and reviews recent nationally representative surveys on the prevalence of these plans. We also introduce the NBER shared capitalism data, based on questions added to the 2002 and 2006 General Social Surveys (GSS) and more than 40,000 employee surveys from 14 companies with different combinations of shared capitalism plans. We find that while shared capitalism exists broadly throughout the economy, it is more likely in larger establishments. The free rider effect may be countered by the use of other policies to create productive teamwork and a cooperative culture: shared capitalism is positively linked to workplace decision-making, training, job security, teamwork, the ability to easily observe co-worker performance, and low levels of supervision. Also, more risk-averse employees avoid participating in several types of shared capitalism, but two-thirds of even the most risk-averse employees in these companies say they want shared capitalism as part of their pay package. The effects of these plans for both workers and firms are more fully explored in accompanying papers.
Keywords: shared capitalism; employee ownership; profit sharing; gain sharing; financial participation
JEL Codes: J33; J54; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shared capitalism (P12) | workplace decision-making (J29) |
| shared capitalism (P12) | training (M53) |
| shared capitalism (P12) | job security (J28) |
| shared capitalism (P12) | teamwork (M54) |
| shared capitalism (P12) | ability to observe coworker performance (M54) |
| shared capitalism (P12) | low supervision levels (I21) |
| shared capitalism (P12) | employee engagement (M54) |
| shared capitalism (P12) | firm survival rates (L21) |