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Worker Self-Selection and the Profits from Cooperation

  • Kosfeld, Michael

    ()

    (Goethe University Frankfurt)

  • von Siemens, Ferdinand

    ()

    (University of Amsterdam)

We investigate a competitive labor market with team production. Workers differ in their motivation to exert team effort and types are private information. We show that there can exist a separating equilibrium in which workers self-select into different firms and firms employing cooperative workers make strictly positive profits. Profit differences across firms persist because cooperation strictly increases output and worker separation requires firms employing cooperative workers to pay out weakly lower wages.

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File URL: http://ftp.iza.org/dp3881.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3881.

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Length: 13 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Journal of the European Economic Association, 2009, 7(2-3), 573 - 582
Handle: RePEc:iza:izadps:dp3881
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  1. repec:dgr:uvatin:20020118 is not listed on IDEAS
  2. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
  3. Jeffrey Carpenter & Erika Seki, 2005. "Do Social PreferencesIncrease Productivity? Field experimental evidence from fishermen in Toyoma Bay," Middlebury College Working Paper Series 0515, Middlebury College, Department of Economics.
  4. Simon Gächter & Christian Thöni, 2004. "Social learning and voluntary cooperation among like-minded people," University of St. Gallen Department of Economics working paper series 2004 2004-12, Department of Economics, University of St. Gallen.
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