How do worker cooperatives stabilize employment? The role of profit reinvestment into locked assets
Cecilia Navarra ()
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Cecilia Navarra: Center for Research in the Economics of Development, University of Namur
No 1307, Working Papers from University of Namur, Department of Economics
A frequent characteristic of worker cooperatives is the tendency to reinvest a large share of profits into asset locks: a common fund, indivisible and not appropriable by members, neither upon quitting, nor at the end of the firms life. To explain this behaviour, I introduce the hypothesis that asset locks play a significant role in employment stabilization. This can be obtained in two ways: by letting wages fluctuate, or by accumulating reinvested profits into an income stabilizing fund that allows to face downturns without firing and without reducing wages. In this second case, asset locks play a wage smoothing role. I provide evidence for this function by means of original data at the firm level and by first-hand collected survey data at the individual level on risk perception in a sample of Italian cooperatives.
Keywords: worker cooperatives; asset locks; employment stability; wage smoothing (search for similar items in EconPapers)
JEL-codes: J54 P13 (search for similar items in EconPapers)
Pages: 28 pages
New Economics Papers: this item is included in nep-hme and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:nam:wpaper:1307
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