Workers as Partners: a Theory of Responsible Firms in Labor Markets

Francesco Del Prato () and Marc Fleurbaey ()
Additional contact information
Francesco Del Prato: Aarhus University [Aarhus]
Marc Fleurbaey: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris

PSE Working Papers from HAL

Abstract: We study responsible firms that internalize incumbent-worker surplus in frictional labor markets. In a firm-level benchmark, responsibility creates an endogenous wedge in the effective marginal cost of labor—akin to a hiring subsidy in the firm's first-order conditions—so it changes wage and vacancy incentives rather than only redistributing rents. The wedge is largest when outside options are weak and separations are rare, implying larger responsible wage premia in low-mobility environments and pointing to a countercyclical role for responsible wage setting. In a wage-posting model with on-the-job search, responsible firms occupy the upper tail of thewage distribution and can generate a segmented high-wage sector. In a DMP model with bargaining and endogenous tightness, responsible governance raises the value of unemployment and spills over to wages at profit-maximizing firms.

Keywords: Labor market; Monopsony power; Search model; Corporate social responsibility (search for similar items in EconPapers)
Date: 2026-02
New Economics Papers: this item is included in nep-com
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04788058v2
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://shs.hal.science/halshs-04788058v2/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-04788058

DOI: 10.48550/arXiv.2411.05567

Access Statistics for this paper

More papers in PSE Working Papers from HAL
Bibliographic data for series maintained by CCSD ().