Voice and Loyalty as a Delegation of Authority: A Model and a Test on Matched Worker-Firm Panels
The authors model a mechanism that makes delegation of authority from a firm to a collective of workers profitable. Power is exchanged for loyalty. The model is tested using a matched panel of French workers and firms. For these firms, the authors know at two dates (1986 and 1992) whether a firm-level agreement has been signed. Furthermore, at these two dates and for each firm, a representative sample of the employees provides information on the individuals. The authors show both theoretically and empirically that the voluntary signature of such an agreement induces lower employee turnover given the structure of wages. Copyright 1997 by University of Chicago Press.
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- Nahum D. Melumad & Dilip Mookherjee & Stefan Reichelstein, 1995. "Hierarchical Decentralization of Incentive Contracts," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 654-672, Winter.
- Crawford, Vincent P & Haller, Hans, 1990. "Learning How to Cooperate: Optimal Play in Repeated Coordination Games," Econometrica, Econometric Society, vol. 58(3), pages 571-95, May.
- Farrell, Joseph & Gibbons, Robert, 1995. "Cheap Talk about Specific Investments," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(2), pages 313-34, October.
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