Sj. Yao, PROFIT-SHARING, BONUS PAYMENT, AND PRODUCTIVITY - A CASE-STUDY OF CHINESE STATE-OWNED ENTERPRISES, Journal of comparative economics, 24(3), 1997, pp. 281-296
This paper studies the impact of profit sharing and bonus payment on t
he performance of Chinese state industries in the 1980's. Employing th
e Kmenta approximation of a CES function and a nonlinear simultaneous
system, it is found that over half of value-added growth could be expl
ained by bonus incentives. Labor quality was another important factor
affecting firm performance. Previous studies that do not consider labo
r quality may have produced biased results. The positive effect of bon
us payment on production found by others is, however, confirmed. (C) 1
997 Academic Press.