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Productivity, Capital and Labor in Labor-Managed and Conventional Firms

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  • FAKHFAKH F.
  • PEROTIN V.
  • GAGO M.

Abstract

Despite a continuing interest in the compared efficiency of labor-managed and conventional firms, only a handful of comparative empirical studies exist. These studies suggest that labor-managed firms have the same productivity levels as conventional ones, but organize production differently. However, the data used in these studies cover a single industry, or firms matched by industry and size in manufacturing, and concern a few dozen firms. In addition, the use of constant-elasticity production functions in past studies has made it difficult to distinguish the effects of incentives embodied in the factors of production from those of scale differences that could be caused by the differences in factor demand behavior between conventional and labor-managed firms hypothesized by economic theory. The paper compares the productivity of labor-managed and conventional firms using two new panel data sets covering several thousand firms from France, including representative samples of conventional firms and all worker cooperatives with 20 employees or more in manufacturing and services. We present Generalized Least Squares (GLS) and Generalized Moments Method (GMM) estimations of translog production functions industry by industry for cooperative and conventional firms and test for the equality of their total factor productivities. We also allow systematic differences in scale and technology to be determined by the ownership form. The translog specification, which allows returns to scale to vary with input levels, makes it possible to disentangle embodied incentive effects from systematic differences in scale due to underinvestment in labor-managed firms. In the process, we also propose updated "stylized facts" about labor-managed firms in comparison with conventional firms. Our production function estimates suggest that cooperatives are at least as productive as conventional firms. However, the two types of firms organize production differently. Cooperatives are mor

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by ERMES, University Paris 2 in its series Working Papers ERMES with number 0910.

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Date of creation: 2009
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Handle: RePEc:erm:papers:0910

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References

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  1. John T. Addison, 2005. "THE DETERMINANTS OF FIRM PERFORMANCE: UNIONS, WORKS COUNCILS, AND EMPLOYEE INVOLVEMENT/HIGH-PERFORMANCE WORK PRACTICES," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 406-450, 07.
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Citations

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Cited by:
  1. Gabriel Burdín, 2013. "Equality under threat by the talented: evidence from worker-managed firms," Documentos de Trabajo basados en Monografías (students working papers) 13-12, Instituto de Economía - IECON.
  2. 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.
  3. Pencavel, John, 2012. "Worker Cooperatives and Democratic Governance," IZA Discussion Papers 6932, Institute for the Study of Labor (IZA).
  4. Burdín, Gabriel, 2013. "Are Worker-Managed Firms Really More Likely to Fail?," IZA Discussion Papers 7412, Institute for the Study of Labor (IZA).

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