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Attracting responsible employees: Green production as labor market screening

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  • Brekke, Kjell Arne
  • Nyborg, Karine

Abstract

Corporate social responsibility can improve firms' ability to recruit highly motivated employees. This can secure socially responsible firms' survival even in a highly competitive environment. We show that if both socially responsible (green) and non-responsible (brown) firms exist in equilibrium, workers with high moral motivation, who shirk less than others, will self-select into the green firms. If unobservable effort is sufficiently important for firm productivity, this can drive every brown firm out of business--even in the case where many workers have no moral motivation whatsoever.

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  • Brekke, Kjell Arne & Nyborg, Karine, 2008. "Attracting responsible employees: Green production as labor market screening," Resource and Energy Economics, Elsevier, vol. 30(4), pages 509-526, December.
  • Handle: RePEc:eee:resene:v:30:y:2008:i:4:p:509-526
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