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The purpose of this paper is to review the historical background for broad-based ownership in the USA, the development of forms of employee ownership and profit sharing in the USA, the research literature on employee ownership and profit sharing and related employee participation, the development of policy and options for new policies.

It is a literature review.

There are four reasons to be interested in employee stock ownership and profit sharing today: first, employee share ownership and profit sharing can increase worker pay and wealth and broaden the overall distribution of income and wealth, a key ingredient for a successful democracy. To be a tool for reducing inequality, employee stock ownership and profit sharing must be spread more widely and meaningfully than it is today. Second, employee share ownership and profit sharing provide incentives for more effort, cooperation, information sharing and innovation that can improve workplace performance and company productivity. Third, employee share ownership and profit sharing can save jobs by enhancing firm survival and employment stability, with wider economic benefits that come from decreasing unemployment. Fourth, employee share ownership and profit sharing can create more harmonious workplaces with greater corporate transparency and increased worker involvement in their work lives through access to information and participation in workplace decisions.

Growth has been extraordinarily sluggish in the recovery from the Great Recession and has weakened in advanced countries over a longer period, leading some analysts to believe that the authors have entered a new economic era of small to modest growth. This may turn out to be true, which will increase the importance of growth-enhancing policies. The evidence that firms with employee stock ownership and/or profit-sharing perform better than others suggests that policies that extend ownership would boost the country’s lagging growth rate. The evidence that employee share ownership firms preserve jobs and survive recessions better than others suggests that policies that extend ownership could help stabilize the economy when the next recession comes down the pike.

Because there may be informational or institutional barriers about the benefits of ownership and sharing and the ways firms can introduce such programs that government can help overcome. Government has often played a role in promoting performance-enhancing work practices to enhance overall economy-wide outcomes from higher productivity and innovation, such as the long history of agricultural extension services (since 1887) to spread information on best practices in farming, and employer education on safety practices conducted by the Occupational Safety and Health Administration.

Because of the “externalities” – effects that extend beyond the firm and its members – that greater ownership/profit sharing can bring us. If employee ownership and profit sharing lead to fewer layoffs and firm closures, this can reduce recession-created drops in consumer purchasing power and aggregate demand; government expenditures on unemployment compensation and other forms of support; decreased tax base for supporting schools and infrastructure; and potentially harmful social and personal effects, such as marital breakups and alcohol abuse. Apart from unemployment, more broadly shared prosperity and lower inequality may also have wider benefits for macroeconomic growth, stability and societal outcomes, as described by a number of social scientists. To the extent the ownership and profit sharing is a public good, a nudge in policy to consider the idea makes sense.

Because it is hard to find policy options that are as bipartisan as the shares policy. In The Citizens’ Share, and in other articles and venues, the authors lay out the areas in which there is evidence or logic for in-depth development of, and experimentation with, several broad policy directions, with the details to be worked out by members of Congress based on their deliberations.

This study aims to disclose how the nature of corporate ownership, stock efficiency and wage level affect the optimal proportion of employee stock.

This paper studies three duopoly markets: two private enterprises, two state-owned enterprises (SOEs) and a private enterprise and an SOE. The competitions between the two parties are taken as a two-stage dynamic sequential game and studied through back-induction.

The results reveal that the enterprise ownership has a directly bearing on the optimal proportion of employee stock and determines whether to implement the employee stock ownership plan (ESOP) and the specific level of the plan. The optimal proportion of employee stock is positively correlated with its contribution to enterprise efficiency. There are many influencing factors on the effect of wage level on the optimal proportion of employee stock, namely, the ownership nature of ESOP implementer and efficiency difference of different nature stocks.

The results of this study provide policy recommendations for companies preparing to implement ESOP.

The research findings provide policy implications for enterprises to prepare a suitable ESOP and the reform of national equities, especially the mixed-ownership reform in China.

The conventional wisdom regarding the rationale for employee stock ownership plans (ESOPS) holds that such plans provide incentives for improved worker productivity. This view minimizes the employees' portfolio problem inherent in ESOP participation — employment risk for ESOP participants is increased by tying their investment/retirement program to the fortunes of the company in which they are employed. We examine the extent of empirical support for the incentive alignment theory of ESOPs, along with two alternative explanations. One alternative holds that firms initiating ESOP plans signal high investment quality, thus reducing the cost of raising equity capital. Another theory is that ESOPs are a form of coalition, or “devil's pact” between managers and workers in which they agree to prolong and share in perquisite consumption. A large sample of ESOP plans is divided into three categories: anti‐takeover plans, wage concession plans, and “pure” ESOPs. Analysis of pre‐ and post ESOP conditions and stock returns is performed. Among the findings is that pure ESOPs appear to have effects consistent with improvements in worker productivity and/or signaling high investment quality. Strong support for the devil's pact theory is found in the anti‐takeover subcategories of ESOPs.

Drawing on bargaining power and the inequality aversion perspective, this study aims to probe employees’ influence on addressing income inequality between top executives and nonexecutive employees. Meanwhile, it examines the moderating role of employee-related factors and plan attributes.

This study uses a staggered difference-in-differences design with a propensity scoring match approach and verification of the parallel trend assumption to test the hypotheses.

The results support the hypothesis that employee stock ownership plans (ESOPs) significantly reduce within-firm income inequality. The negative effect is amplified by both the presence of trade unions and the unemployment rate at the regional level, as well as the duration of the lock-in period and the scale of participants within the stock ownership plan.

This study has implications for income inequality research and ESOP design and provides theoretical support for policymakers and corporate governance.

This study contributes to the literature on income inequality by examining the implementation of ESOPs from the employee perspective. Furthermore, it extends the current literature by investigating the strengthening effects of regional factors and ESOP attributes on the relationship between ESOPs and income inequality. The conclusions provide new empirical evidence to promote the effective implementation of ESOPs by combining internal and external factors.

This paper examines how management approaches to employee stock ownership plan (ESOP) implementation affects such employee work‐related attitudes as job satisfaction, ESOP satisfaction, and job involvement. Structural‐equation modeling assesses the responses of 321 airline pilots who were employed by one of three major US‐based airlines. The results indicated positive linkages between the instrumentally and extrinsically satisfying aspects of employee ownership and ESOP satisfaction, job satisfaction, and job involvement.

Employee ownership has a rich tradition throughout the world in the form of co‐operative enterprises, however, the concept has received a new boost in the form of employee stock ownership plans (ESOPs). In order to understand why the stock model of ownership has received so much attention worldwide, one must examine the known and potential benefits of this model. As the United States provides the most widespread example of employee stock ownership, we shall begin our discussion there. The next section addresses in depth the corporate performance benefits of employee ownership and outlines additional benefits of interest throughout the world. The final section offers a brief look at employee ownership worldwide.

The rapid increase in the number of employee stock ownership plans (ESOPs) being sponsored by American firms could have an impact on the rate of the nation’s productivity growth. The majority of prior ESOP‐related studies have focused on the examination of potential relationships between the presence of an ESOP and changes in the levels of employee productivity and firm profitability. The results of these studies have produced mixed results and, as a result, debate continues over the desirability and impact of ESOPs. Few studies have attempted to identify the variables that are associated with employee satisfaction with an ESOP and whether or not employee satisfaction with an ESOP ultimately has an impact on employee productivity and firm profitability. In order to maximize the productivity gains that may be associated with the adoption of an ESOP, researchers must identify the relationships and variables that are most likely to affect employee attitudes toward ESOPs.

The objective of this paper is to document the impact of several types of ESOP announcements on shareholder wealth. The market welcomes the news of initiation ESOPs, nonleveraged ESOPs and ESOPs implemented by firms with B‐BAA Moody's bond rating. However, the market indifferently responds to announcements of expansion ESOPs, leveraged ESOPs and ESOPs adopted by firms with A‐AAA Moody's bond rating. Announcements of nonleveraged ESOPs, expansion ESOPs and B‐BAA rating ESOPs are found to be associated with some resolution of asymmetric information.

This paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be linked to market power, either through contributing to firm growth that leads to market power or through industry leaders adopting employee ownership as part of rent sharing or a broader consolidation of market position. Both employee stock ownership plan (ESOP) coverage and product market concentration (PMC) have been increasing in the past two decades, providing a good opportunity to see if and how these are related.

The authors predict ESOP adoption and termination using multilevel regressions based on 2002–2012 firm- and industry-level data from the Census Bureau, Compustat and Form 5500 pension datasets.

The authors find that the top four firms in concentrated industries are more likely to adopt Employee Stock Ownership Plans (ESOPs), while having an ESOP does not predict entering the top four, apart from firm-level predictors. Tests indicate the first result does not reflect simple rent sharing with employees but instead appears to reflect an effort by firms to consolidate market power through the attraction and retention (or “locking in”) of industry talent. Other positive predictors of ESOPs include company size, being in a high-wage industry and having a defined benefit (DB) pension.

To better distinguish among hypotheses, it would be helpful to have firm-level data on managerial attitudes, strategies, networks and monopsony measures. Therefore, future research using such data would be highly useful and encouraged.

The paper includes implications for the potential usefulness of ESOPs in attracting and retaining talent and for the design of nuanced policy to encourage more broadly based sharing of economic rewards.

While prior research focuses on firm-level predictors of employee ownership, this study uses market concentration and other industry-level variables to predict the use of ESOPs. This study makes a unique contribution, broadening the current thinking on firm motives and environmental conditions predictive of firm ESOP adoption.

This paper aims to identify the key lessons to learn from the US employee stock ownership plan (ESOP)-model. The lessons are, broad-based employee ownership is difficult to attain and sustain if employees have to use their own money to purchase shares. The paper works better when the shares are held in trust rather than being held individually. Broad-based employee ownership improves corporate performance and employee financial security. Employees care more about how employee ownership affects the stability of their jobs and retirement than having governance rights. If laws require democratic governance there will not be widespread employee ownership. Tax incentives are critical to induce companies and their owners to share ownership.

This paper is based on results from National Center for Employee Ownership research, a review of other research in the field, and the author’s own 45 years of experience in this field.

About one-quarter of the private sector workforce in the USA participates in some kind of employee ownership plan. There are 6,700 ESOPs in the USA with 14 million participants. The ESOPs hold over $1.4 trillion in assets. About 6,000 of these plans are in non-listed companies and the companies employ about two million people. Public companies ESOPs generally own under 10% of company stock; private company ESOPs usually own at least 30% of the stock and a majority of the plans own 100% of the stock. Most of these companies have between 20 and 500 employees.

The article gives a practitioner's overview over the main reasons behind the success of the ESOP model in the USA.