Employee-Owned Firms and the Careers of Young Workers

61 Pages Posted: 20 Jan 2023

See all articles by Gabriel Burdin

Gabriel Burdin

University of Leeds - Faculty of Business; IZA Institute of Labor Economics

Jose Garcia-Louzao

Bank of Lithuania; Vilnius University; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

Using detailed administrative data from Spain, we investigate the impact of having an initial work experience in an employee-owned firm (EOF) versus a conventional business on subsequent earnings. We find that young workers' exposure to EOFs at the time of labour market entry reduces earnings by about 8% during the first 15 years in the labour market. The selection of individuals with low initial ability in EOFs does not appear to be a relevant channel. Our results seem to be rather related to differences in job mobility and wage returns to experience. On the one hand, we document lower wage returns to experience acquired in EOFs, although no differences in subsequent career progression in terms of promotions. On the other hand, we find that workers who had their first job in EOFs show a strong attachment to such a business model and are less likely to voluntarily leave their employers. Taken together, our findings suggest the existence of non-pecuniary job attributes offered by EOFs that might compensate for lower lifetime earnings.

Keywords: employee-owned firms, careers, wages, job mobility

JEL Classification: J31, J50, J62

Suggested Citation

Burdin, Gabriel and Garcia-Louzao, Jose, Employee-Owned Firms and the Careers of Young Workers. IZA Discussion Paper No. 15880, Available at SSRN: https://ssrn.com/abstract=4331406 or http://dx.doi.org/10.2139/ssrn.4331406

Gabriel Burdin (Contact Author)

University of Leeds - Faculty of Business ( email )

Leeds LS2 9JT
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Jose Garcia-Louzao

Bank of Lithuania ( email )

Totoriu 4
Vilnius, LT-01121
Lithuania

Vilnius University ( email )

Sauletekio ave. 11, Vilnius
Vilnius
Lithuania

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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