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Worker Self-Selection and the Profits from Cooperation

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  • Kosfeld, Michael

    (Goethe University Frankfurt)

  • von Siemens, Ferdinand

    (Goethe University Frankfurt)

Abstract

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.

Suggested Citation

  • Kosfeld, Michael & von Siemens, Ferdinand, 2008. "Worker Self-Selection and the Profits from Cooperation," IZA Discussion Papers 3881, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3881
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    References listed on IDEAS

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    1. Jeffrey Carpenter & Erika Seki, 2011. "Do Social Preferences Increase Productivity? Field Experimental Evidence From Fishermen In Toyama Bay," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 612-630, April.
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    More about this item

    Keywords

    self-selection; team work;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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