Employer moral hazard and wage rigidity. The case of worker owned and investor owned firms
| Autor: | Cecilia Navarra, Ermanno Tortia, Marina Albanese |
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| Přispěvatelé: | Albanese, Marina, Cecilia, Navarra, Ermanno C., Tortia |
| Jazyk: | angličtina |
| Rok vydání: | 2015 |
| Předmět: |
Worker cooperative
Economics and Econometrics Labour economics Asymmetric information Moral hazard media_common.quotation_subject Principal–agent problem Wage Risk aversion Employment contract Hidden action Incentive Information asymmetry Demand shock Worker cooperatives Employment insurance Income insurance Opportunism Economics Law Finance media_common |
| Zdroj: | International Review of Law and Economics. 43:227-237 |
| ISSN: | 1873-6394 0144-8188 |
| Popis: | This paper studies wage and employment rigidity in a labor relationship in different organizational contexts. In investor owned firms, if the contract allows for flexible wages, the employer may have an incentive to opportunistically claim low demand and cut wages. Anticipating the employer's opportunism, workers may demand a fixed-wage contract, which may lead to inefficient layoffs in the presence of negative demand shocks. In contrast, in cooperatives, where the employer does respond to workers, the risk of employer's opportunism diminishes and results in an equilibrium characterized by more flexible wages and fewer layoffs. By developing these arguments we challenge the traditional explanation of workers’ preference for fixed wages based on risk aversion. To support our claim, we develop a principal agent model in which there is incomplete information on both sides of the employment relation. We model both the case of investor-owned firms and worker cooperatives. |
| Databáze: | OpenAIRE |
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