AbstractWe analyze the impact of profit sharing on training intensity. Profit sharing may affect training because it is a credible commitment by firms to reward firm‐specific skills, may reduce turnover and leads to peer group pressure to participate in training courses. To eliminate possible selectivity effects, we combine matching with difference‐in‐differences. We identify the proportion of employees participating in profits and differentiate profit sharing according to the percentage of the workers covered. Using German establishment data we find that profit sharing only has a significant effect on training intensity if the majority of the workforce benefits from it.