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Employee ownership: does firm's size matter ?

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Author Info

  • Marc-Arthur Diaye

    ()
    (EPEE, Université d’Evry Val d’Essonne)

  • Amal Hili

    ()
    (Laboratoire d’Ingénierie Mathématique - Ecole Polytechnique de Tunisie, FDSEPS Sousse and GREQAM, Université de la Méditerranée)

  • Rim Lahmandi-Ayed

    ()
    (Laboratoire d’Ingénierie Mathématique - Ecole Polytechnique de Tunisie and ESSAI)

Abstract

A theoretical model is considered in a monopoly setting, where the production cost of the firm depends on the efforts of employees who may receive a positive part of the capital if the shareholders find profitable to do so. We specify the condition under which at Nash equilibrium the firm distributes a positive part of its capital to employees, and analyze the effects of this employee ownership strategy on social welfare. We show that the conditions under which shareholders attribute a positive share of capital to employees, is related jointly to the firm’s size and effort disutility, which makes the novelty of our paper relative to the previous papers considering the firm’s size alone. This joint role is tested empirically, using a French data base “REPONSE 2004-2005”. Our paper may allow to explain why in the empirical literature there is no consensus regarding the relationship between firm’s size and employee ownership implementation.

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File URL: http://epee.univ-evry.fr/RePEc/2012/12-02.pdf
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Bibliographic Info

Paper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 12-02.

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Length: 23 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:eve:wpaper:12-02

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Keywords: employee ownership; employees’ efforts; firm’s size; effort disutility; social welfare; absenteeism;

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  1. Georges Dionne & Benoit Dostie, 2007. "New Evidence on the Determinants of Absenteeism Using Linked Employer-Employee Data," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(1), pages 108-120, October.
  2. Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
  3. Sarah Brown & Fathi Fakhfakh & John G. Sessions, 1999. "Absenteeism and profit sharing: An empirical analysis based on French panel data, 1981û1991," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 234-251, January.
  4. Allen, Steven G, 1981. "An Empirical Model of Work Attendance," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 77-87, February.
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