French Profit-Sharing Law Moves Surplus From Shareholders To Low-Paid Staff
A study of French tax-filing data by Elio Nimier-David of Cornell University, David Sraer of the University of California, Berkeley, and David Thesmar of MIT finds that mandatory profit sharing raises pay for lower-skilled workers without productivity effects. Typical payouts run 4 to 5 percent of wages, funded by shareholders and by tax payments falling roughly 20 cents per dollar paid out.
The interesting part is not the profit a firm earns but where the surplus lands once earned. Higher-skilled staff see base wages substitute for the bonus, so total compensation holds steady, while lower-skilled staff gain outright. Owners approaching the 50-employee threshold, lowered from 100 in 1990, weigh a new hire against sharing profits with everyone, and often decline.
Source: Stanford Social Innovation Review · September 29, 2026