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Revisiting the objectives of worker-managed firms: An empirical assessment

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  • Burdín, Gabriel
  • Dean, Andrés

Abstract

This paper provides new evidence on the objectives pursued by worker-managed firms (WMFs). The basic neoclassical model assumes that WMFs maximizes net income per member instead of total profits (Ward, 1958). Even though it has been largely criticized, the Ward model has dominated the self-management literature. Alternative models suggest that WMFs are not only concerned about income per worker but also about the level of employment. However, the empirical content of these competing theoretical models has been rarely analyzed. This paper contributes to fill this gap by estimating the parameters of a generic welfare function, following the methodology proposed by Craig and Pencavel (1993). These parameters determine the relative importance that a WMF places on income per worker vis-a-vis the level of employment. Estimates are based on a long micro-panel of Uruguayan firms covering the entire population of Uruguayan worker-managed firm and conventional firms in 31 3-digit sectors over the period April 1996-December 2005. Following a strictly neoclassical framework, but simply allowing a more general specification of the WMF goals, we show that the assumption of the basic neoclassical model of the WMF is misleading. Our results support the view that WMFs are concerned with both employment and income per worker.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 36 (2012)
Issue (Month): 1 ()
Pages: 158-171

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Handle: RePEc:eee:ecosys:v:36:y:2012:i:1:p:158-171

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Keywords: Capitalist firms; Worker cooperatives; Firm objectives;

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References

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  1. Pencavel, John & Pistaferri, Luigi & Schivardi, Fabiano, 2006. "Wages, Employment, and Capital in Capitalist and Worker-Owned Firms," IZA Discussion Papers 2188, Institute for the Study of Labor (IZA).
  2. Craig, Ben & Pencavel, John, 1992. "The Behavior of Worker Cooperatives: The Plywood Companies of the Pacific Northwest," American Economic Review, American Economic Association, vol. 82(5), pages 1083-105, December.
  3. Dertouzos, James N & Pencavel, John H, 1981. "Wage and Employment Determination under Trade Unionism: The International Typographical Union," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1162-81, December.
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Citations

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Cited by:
  1. Andrés Dean, 2014. "¿Las cooperativas de trabajadores degeneran?," Documentos de Trabajo (working papers) 14-01, Instituto de Economía - IECON.
  2. Burdín, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute for the Study of Labor (IZA).
  3. Carmen Marcuello & Pablo Nachar-Calderón, 2012. "Sociedad cooperativa y socio cooperativo: propuesta de sus funciones objetivo," Documentos de Trabajo dt2012-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  4. Verónica Amarante & Andrés Dean, 2012. "Dinámica del mercado laboral uruguayo," Documentos de Trabajo (working papers) 12-17, Instituto de Economía - IECON.
  5. F. Delbono & C. Reggiani, 2013. "Cooperative firms and the crisis: evidence from some Italian mixed oligopolies," Working Papers wp884, Dipartimento Scienze Economiche, Universita' di Bologna.
  6. Gabriel Burdin, 2012. "Does workers’ control affect firm survival? Evidence from Uruguay," Department of Economics University of Siena 641, Department of Economics, University of Siena.
  7. Gabriel Burdin, 2014. "Are Worker-Managed Firms More Likely to Fail than Conventional Enterprises? Evidence from Uruguay," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 67(1), pages 202-238, January.
  8. Guillermo Alves & Gabriel Burdin & Paula Carrasco & Andrés Dean & Andrés Rius, 2012. "Empleo, remuneraciones e inversión en cooperativas de trabajadores y empresas convencionales: nueva evidencia para Uruguay," Documentos de Trabajo (working papers) 12-14, Instituto de Economía - IECON.
  9. Sebastián Berazategui & Emilio Landinelli & Daniel Ramírez, 2013. "Una comparación del comportamiento innovador entre Cooperativas de Trabajo y Empresas Capitalistas en Uruguay," Documentos de Trabajo basados en Monografias (students working papers) 13-02, Instituto de Economía - IECON.

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