Understanding variation in the efficacy of financial participation across Europe: The role of country level factors
Little is known about variation in the efficacy of financial participation across countries. This article examines the relationship between two types of financial participation (profit sharing and employee share ownership) and labour productivity across 29 European countries using a representative workplace survey. Consistent with theoretical expectations, profit sharing is associated with superior labour productivity when it is open to all employees, whilst the evidence for employee share ownership is more mixed. Analysis reveals considerable variation in the efficacy of both schemes across Europe. Country level collective bargaining coverage has the greatest explanatory power in accounting for cross country variation in efficacy. In countries with higher levels of collective bargaining coverage, profit sharing performs less well, whereas employee share ownership performs better, relative to countries with lower collective bargaining coverage. These findings shed light on the comparative dimension of the financial participation labour productivity link.