Facoltà di Economia di Forlì Laurea Magistrale in Economia Sociale Working Papers 118 Employer moral hazard and wage rigidity. The case of worker-owned and investor-owned firms. Marina Albanese University of Naples, Federico II Cecilia Navarra University of Turin and Namur, Belgium Ermanno Tortia University of of Trento Febbraio 2013 Info: AICCON - Tel. 0543.62327 -
[email protected] - www.aiccon.it Employer moral hazard and wage rigidity The case of worker-owned and investor-owned firms Marina Albanese, University of Naples, Federico II:
[email protected] Cecilia Navarra, University of Turin and Namur, Belgium:
[email protected] Ermanno Tortia, University of Trento:
[email protected] Abstract The standard explanation of wage rigidity in principal agent and in efficiency wage models is related to worker risk-aversion. However, these explanations do not consider at least two important classes of empirical evidence: (1) In worker cooperatives workers appear to behave in a less risk averse way than in for profit firms and to accept fluctuating wages; (2) The emerging experimental evidence on the employment contract shows that most workers prefer higher but more uncertain wages to lower fixed wages. Workers do not appear to express a preference for fixed wages in all situations and different ownership forms, in our case worker cooperatives and for-profit firms, behave in different ways when dealing with the trade-off between wage rigidity and employment fluctuations. More specifically, worker cooperatives are characterized, in relative terms, by fixed employment levels and fluctuating wages, while for-profit firms are characterized by fixed wages and fluctuating employment.