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BARGAINING GAME AND EQUITY SHARING SYSTEM IN EMPLOYMENT PROBLEM

Anton Abdulbasah Kamil

Abstract


Profit sharing has been proposed as a solution to underemployment
resulting from collective bargaining, but the empirical results are
ambiguous and the theoretical basis for this claim is weak. This paper
shows equity sharing can, in theory, solve the principle shortcomings of
profit sharing. First, equity sharing can resolve both underemployment and
over employment. Second, the results do not depend on assuming that
insiders and the firm are prevented from bargaining over employment
level. Third the system does not require government intervention since
both sides can benefit from adopting equity sharing.

Keywords: Bargaining game, profit sharing model, equity sharing.


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