EMPLOYMENT STABILIZATION INSIDE FIRMS: AN EMPIRICAL INVESTIGATION OF WORKER COOPERATIVES

Cecilia Navarra

Annals of Public and Cooperative Economics, 2016, vol. 87, issue 4, 563-585

Abstract: There is evidence that worker cooperatives provide a greater stabilization of employment compared to capital-managed firms. While the reasons of this behaviour can be ascribed to their property and governance structure, less is known of the tools to put it into practice. I discuss two possible ways to guarantee employment insurance: by letting wages fluctuate, or by accumulating reinvested profits into an income stabilizing fund that copes with downturns without firing and without reducing wages. In this second case, I find out that asset locks play a wage smoothing role. This may explain the large share of profits that are reinvested in this indivisible and not appropriable fund. I provide evidence for this mechanism by means of original data at the firm level and of first-hand collected survey data at the individual level on risk perception in a sample of Italian cooperatives.

Date: 2016
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