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Worker Self-Selection and the Profits from CooperationMichael KosfeldFaculty of Economics and Business Administration; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Ferdinand Von SiemensGoethe University Frankfurt IZA Discussion Paper No. 3881 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.
Number of Pages in PDF File: 13 Keywords: team work, self-selection JEL Classification: D82, D86, M50 working papers seriesDate posted: December 15, 2008Suggested CitationContact Information
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