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Cooperative Labor Allocation Under Uncertainty

Author

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  • Parliament, Claudia
  • Tsur, Yacov
  • Zilberman, David

Abstract

Understanding the allocation of labor between collective and private activities within cooperatives has been an issue of interest for economists and policy makers. This paper extends existing literature by incorporating income uncertainty from both private and collective activities, and by assuming that members are risk averse. The analysis suggests a member's labor response to policy parameters can be decomposed into three components: the mean effect, reflecting the labor response under certainty or risk neutrality; the variance effect, reflecting the response to changes in risk; and the wealth effect, reflecting the response to changes in risk aversion associated with changes in wealth. The analysis demonstrates the labor response may be reversed from the certainty or risk neutral case, due to a stronger, opposing variance effect.

Suggested Citation

  • Parliament, Claudia & Tsur, Yacov & Zilberman, David, 1986. "Cooperative Labor Allocation Under Uncertainty," Staff Papers 13672, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13672
    DOI: 10.22004/ag.econ.13672
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    References listed on IDEAS

    as
    1. Bonin, John P., 1977. "Work incentives and uncertainty on a collective farm," Journal of Comparative Economics, Elsevier, vol. 1(1), pages 77-97, March.
    2. Putterman, Louis, 1980. "Voluntary collectivization: A model of producers' institutional choice," Journal of Comparative Economics, Elsevier, vol. 4(2), pages 125-157, June.
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    4. Just, Richard E & Zilberman, David, 1983. "Stochastic Structure, Farm Size and Technology Adoption in Developing Agriculture," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 307-328, July.
    5. Chinn, Dennis L., 1980. "Diligence and laziness in chinese agricultural production teams," Journal of Development Economics, Elsevier, vol. 7(3), pages 331-344, September.
    6. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
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