Employment and Wages over the Business Cycle in Worker-Owned Firms: Evidence from Spain

Jose Garcia-Louzao

No 68, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: This paper compares worker-owned firms and mainstream capital-owned enterprises over the business cycle. Specifically, I study whether conventional employees in worker-owned firms enjoy greater employment stability than similar workers in traditional enterprises over the business cycle, and investigate whether this stability is associated with greater volatility of working-time or wages. Unlike the literature that has compared partners of cooperatives to wage-earners of mainstream firms, I compare wage-earners across both type of organizations along the three margins of adjustment. To perform the econometric analysis, I rely on rich Spanish administrative data and panel data methods to account for composition differences between the two types of organizations. The results show that worker-owned firms offer higher job security because they do not adjust employment levels over the business cycle as much as mainstream enterprises. Wages and working-time, instead, are equally responsive across the two types of firms. The findings can be rationalized by the presence of similar labor regulations and differences in the objectives of the two type of organizations. Namely, both types of firms are constrained by regulations, such as the national Labor Code and collective bargaining, on the adjustments they can impose on wages and working-time. However, the social nature of worker-owned firms mitigates employment volatility in these organizations.

Keywords: Worker-owned firms; Employment; Wages; Working-time; Cyclicality (search for similar items in EconPapers)
JEL-codes: J21 J31 J54 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2019-11-29
New Economics Papers: this item is included in nep-eur, nep-hme and nep-lma
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Related works:
Journal Article: Employment and Wages over the Business Cycle in Worker‐Owned Firms: Evidence from Spain (2021)
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