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How do worker cooperatives stabilize employment? The role of profit reinvestment into locked assets


  • Cecilia Navarra

    () (Center for Research in the Economics of Development, University of Namur)


A frequent characteristic of worker cooperatives is the tendency to reinvest a large share of profits into asset locks: a common fund, indivisible and not appropriable by members, neither upon quitting, nor at the end of the firms life. To explain this behaviour, I introduce the hypothesis that asset locks play a significant role in employment stabilization. This can be obtained in two ways: by letting wages fluctuate, or by accumulating reinvested profits into an income stabilizing fund that allows to face downturns without firing and without reducing wages. In this second case, asset locks play a wage smoothing role. I provide evidence for this function by means of original data at the firm level and by first-hand collected survey data at the individual level on risk perception in a sample of Italian cooperatives.

Suggested Citation

  • Cecilia Navarra, 2013. "How do worker cooperatives stabilize employment? The role of profit reinvestment into locked assets," Working Papers 1307, University of Namur, Department of Economics.
  • Handle: RePEc:nam:wpaper:1307

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    References listed on IDEAS

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    Cited by:

    1. Esteves, Luiz A., 2014. "A Economia das Firmas Cooperadas e a Análise Antitruste
      [The Economics of Cooperative Firms and the Antitrust Analysis]
      ," MPRA Paper 58908, University Library of Munich, Germany.
    2. Virginie Pérotin, 2013. "Worker Cooperatives: Good, Sustainable Jobs in the Community," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(2), pages 34-47, May.

    More about this item


    worker cooperatives; asset locks; employment stability; wage smoothing;

    JEL classification:

    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises

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