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The Labor-Managed Firm: Permanent or Start-Up Subsidies?

Author

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  • Loek Groot
  • Daan van der Linde

Abstract

We explore a new argument that seeks to explain the near absence of the labor-managed firm or cooperative, despite a range of inefficiencies attributed to the present-day capitalist firm. We derive the crucial condition for the emergence of labor-managed firms and show that it is unduly restrictive from an efficiency point of view. The policy implication is that public intervention to promote labor-managed firms should primarily be in the form of start-up subsidies rather than in providing permanent tax subsidies.

Suggested Citation

  • Loek Groot & Daan van der Linde, 2017. "The Labor-Managed Firm: Permanent or Start-Up Subsidies?," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(4), pages 1074-1093, October.
    • Handle: RePEc:mes:jeciss:v:51:y:2017:i:4:p:1074-1093
    DOI: 10.1080/00213624.2017.1391592
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    Cited by:

    1. FitzRoy, Felix & Nolan, Michael A., 2021. "The Inefficiency of Employment and the Case for Workplace Democracy," IZA Discussion Papers 14065, IZA Network @ LISER.
    2. Ohnishi, Kazuhiro, 2025. "Why labor-managed firms may not be socially desirable," MPRA Paper 126158, University Library of Munich, Germany.
    3. FitzRoy, Felix & Nolan, Michael A., 2020. "Towards Economic Democracy and Social Justice: Profit Sharing, Co-Determination, and Employee Ownership," IZA Discussion Papers 13238, IZA Network @ LISER.
    4. Ho, Jerry & Hoang, Vincent & Wilson, Clevo, 2020. "Government R&D Subsidies and International Competitiveness of Labor-managed Firms," MPRA Paper 106896, University Library of Munich, Germany, revised 09 Dec 2020.

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