| Sumario: | In contrast to the prediction that firms in competitive markets will have a homogeneous set of efficient policies, a number of studies on the relation between the structure of American workplace and economic performance of this structure have discovered substantial variation in human resource and compensation policies, with strong links to workplace performance. Employee profit-sharing plans have attracted attention as a compensation scheme with significant potential to improve both microeconomic and macroeconomic performance. The microeconomic potential is based on the theory that group incentive plans such as profit sharing can result in higher quantity and quality of output by encouraging worker effort, cooperation, and sharing of ideas and information. There has been an upsurge of empirical research on profit sharing in the past decade, focusing on the theories that profit sharing enhances productivity and employment stability. Of the 27 econometric studies that include a profit-sharing variable in a productivity equation, almost all profit-sharing coefficients have been positive, and sampling error around a true coefficient of zero can be rejected for the majority of these estimates. The share economy theory concludes that, if the profit share substitutes for fixed compensation, a profit-sharing firm will have a lower likelihood and magnitude of layoffs when demand for the firm's products decline.
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