Co-operatives, Closures, or Wage Cuts: The Choices Facing Workers in an Ailing Firm

Martin Browning

Canadian Journal of Economics, 1987, vol. 20, issue 1, 114-22

Abstract: Workers faced with the prospect of the closure of their workplace have a limited range of alternatives. They can accept the closure, they can accept wage cuts, or they can take over the firm and form a cooperative. The author finds that if wages are determined in each period in a spot market, then there are circumstances in which workers prefer the latter option. In particular, he finds that workers in an ailing firm may well prefer the cooperative option to closure of their workplace.

Date: 1987
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