Collective Accumulation of Capital in Italian Worker Cooperatives Between Employment Insurance and 'We-Rationality': An Empirical Investigation

Abstract

A distinguishing feature of Italian worker cooperatives is the propensity to reinvest a huge share of profits into asset locks, a common fund, non divisible and non appropriable by members, even at the end of the cooperative’s life. This work investigates the reasons for this practice, after discussing the most common interpretations provided by the literature. The hypothesis that is suggested is that asset locks play a significant role in employment stabilization. This can, indeed, be obtained in two ways: by letting wages fluctuate, or by accumulating reinvested profits into an “insurance” fund that allows the organization to face downturns without firing anyone and, at the same time, without reducing wages. In this second case, asset locks have an employment insurance and income smoothing role. This study, then, incorporates two further factors: the long-term time horizon of workers within the cooperative and the elements of “collective rationality” they may display. Together with the theoretic discussion, some empirical results are provided by means of a case study on the worker cooperatives affiliated to the Legacoop Ravenna, both analyzing firm-level data and individual survey data.

Note: Downloadable paper is in Italian.

Keywords: worker cooperatives, asset locks, employment, income smoothing, time horizon, we-rationality

JEL Classification: J54, P13, D23, D92