.... profits). Design/methodology/approach – The authors apply dynamic panel data techniques to detailed Belgian linked employer-employee panel data covering the period 1999-2006. Findings – Results indicate that FTCs exert stronger positive effects on productivity than on wages and (accordingly...

... such as unions and bargaining framework. We consider a profit‐maximising firm that determines its wage policy by comparing the two alternatives. With performance‐related pay, the firm decides on the fixed wage component and the share parameter. The share parameter is set to give the correct incentives...

... related to firm profits‐per‐employee even when controlling for group effects in the residuals, individual and firm characteristics, industry wage differentials and endogeneity of profits. Our instrumented wage‐profit elasticity is of the magnitude 0.06 and it is not significantly different for men...