WORKER SELF‐SELECTION AND THE PROFITS FROM COOPERATION | Zendy

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WORKER SELF‐SELECTION AND THE PROFITS FROM COOPERATION

Author(s) -

Kosfeld Michael,

Siemens Ferdinand A.

Publication year - 2009

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1162/jeea.2009.7.2-3.573

Subject(s) - siemens , selection (genetic algorithm) , management , sociology , economics , library science , political science , computer science , engineering , artificial intelligence , electrical engineering

We investigate a competitive labor market with team production. Workers differ in their motivation to exert team effort, and types are private information. We show that there can exist a separating equilibrium in which workers self‐select into different firms and firms employing cooperative workers make strictly positive profits. Profit differences across firms persist because cooperation strictly increases output and worker separation requires firms employing cooperative workers to pay out weakly lower wages. (JEL: D82, D86, M50)

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