Profit-sharing boosts effort and moderates wages, improving employment and capital structure.
The article explores how companies decide on hiring, wages, profit-sharing, and debt when they face uncertain income. By using a new bargaining method, the researchers found that profit-sharing can boost worker effort and keep wages in check. Debt can lead to fewer jobs but can also help companies negotiate better with unions. These findings shed light on how businesses make decisions that can affect job numbers and worker pay.