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Moral hazard and moral motivation: Corporate social responsibility as labor market screening

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Listed:
  • Brekke, Kjell Arne

    () (The Ragnar Frisch Centre for Economic Research)

  • Nyborg, Karine

    () (The Ragnar Frisch Centre for Economic Research)

Abstract

Morally motivated individuals behave more cooperatively than predicted by standard theory. Hence,if a firm can attract workers who are strongly motivated by ethical concerns, moral hazard problems like shirking can be reduced. We show that employers may be able to use the firm’s corporate social responsibility profile as a screening device to attract more productive workers. Both pooling and separating equilibria are possible. Even when a substantial share of the workers have no moral motivation whatsoever, such screening may in fact drive every firm with a low social responsibility profile out of business.

Suggested Citation

  • Brekke, Kjell Arne & Nyborg, Karine, 2005. "Moral hazard and moral motivation: Corporate social responsibility as labor market screening," Memorandum 25/2004, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2004_025
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2004/Memo-25-2004.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kjetil Telle, 2006. "“It Pays to be Green” – A Premature Conclusion?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 35(3), pages 195-220, November.
    2. Roland Benabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    3. Giulio Pedrini, 2017. "Law and economics of training: a taxonomy of the main legal and institutional tools addressing suboptimal investments in human capital development," European Journal of Law and Economics, Springer, vol. 43(1), pages 83-105, February.
    4. Pierre Fleckinger & Matthieu Glachant, 2009. "La responsabilité sociale de l'entreprise et les accords volontaires sont-ils complémentaires ?," Economie & Prévision, La Documentation Française, vol. 0(4), pages 95-105.
    5. Thomas P. Lyon & John W. Maxwell, 2008. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 240-260, Summer.
    6. Markus Kitzmueller, 2008. "Economics and Corporate Social Responsibility," Economics Working Papers ECO2008/37, European University Institute.
    7. Isamu Okada, 2011. "An Agent-Based Model of Sustainable Corporate Social Responsibility Activities," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 14(3), pages 1-4.

    More about this item

    Keywords

    Self-image; teamwork; shirking; voluntary abatement;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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