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Working in public and private firms

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  • Corneo, Giacomo
  • Rob, Rafael

Abstract

We develop a theoretical framework for comparing the style of work in public and private enterprises. We incorporate ?socializing?, as an activity that yields utility for workers and affects a firm?s output, into a simple multitask model of work organization. In contrast with previous models, we establish the two following results. First, the optimal workers? compensation policy displays a larger incentive intensity in the private firm than in the public firm. Second, labour productivity in the private firm may be higher or lower than in the public firm. Both results fit well with the findings of empirical work.
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Suggested Citation

  • Corneo, Giacomo & Rob, Rafael, 2003. "Working in public and private firms," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1335-1352, August.
    • Handle: RePEc:eee:pubeco:v:87:y:2003:i:7-8:p:1335-1352
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    More about this item

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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