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Working in Public and Private Firms

  • Corneo, Giacomo
  • Rob, Rafael

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2719.

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Date of creation: Mar 2001
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Handle: RePEc:cpr:ceprdp:2719
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  1. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
  2. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  3. Laffont, Jean-Jacques & Tirole, Jean, 1991. "Privatization and Incentives," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 84-105, Special I.
  4. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," NBER Working Papers 5744, National Bureau of Economic Research, Inc.
  5. CHAMLEY, Christophe & MARCHAND, Maurice & PESTIEAU, Pierre, . "Linear incentive schemes to control public firms," CORE Discussion Papers RP -870, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Corneo, Giacomo & Rob, Rafael, 2001. "Working in Public and Private Firms," CEPR Discussion Papers 2719, C.E.P.R. Discussion Papers.
  7. repec:sae:niesru:v:107:y::i:1:p:63-73 is not listed on IDEAS
  8. Atkinson, Scott E. & Halvorsen, Robert, 1986. "The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities," Journal of Public Economics, Elsevier, vol. 29(3), pages 281-294, April.
  9. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
  10. Roemer, J.E. & Silvestre, J., 1989. "A Welfare Comparison Of Private And Public Monopoly," Papers 340, California Davis - Institute of Governmental Affairs.
  11. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  12. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
  13. Bengt Holmstrom & Paul R. Milgrom, 1985. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Cowles Foundation Discussion Papers 742, Cowles Foundation for Research in Economics, Yale University.
  14. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-36, May.
  15. Drago, Robert & Garvey, Gerald T, 1998. "Incentives for Helping on the Job: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 1-25, January.
  16. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June.
  17. De Fraja, Giovanni, 1993. "Productive efficiency in public and private firms," Journal of Public Economics, Elsevier, vol. 50(1), pages 15-30, January.
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