ON EMPLOYMENT AND LOCAL PUBLIC GOODS IN LABOR MANAGED AND PARTICIPATORY FIRMS AND LABOR UNIONS: INSTITUTIONS, ECONOMIC THEORY, AND ECONOMETRICS
Abstract (summary)
Labor managed and participatory firms, labor unions, and (less a focus here) economic planning mechanisms are found to have in common the role of public goods and or externalities agents. A theory of firm-local public goods, which "nests" much of the previous literature, is developed and applied to the employment level, work hours and collective consumption decisions of these institutions. Strong implications result for the comparative statics of the firm, and a wide class of models of labor managed firms and labor unions are defined in which their supposed "backward bending labor demand curves" will not apply. An econometric methodology is developed where estimated coefficients yield information about this behavior. Two data sets are employed to illustrate this statistical methodology, from industrial cooperatives in Italy and labor managed plywood manufacturing firms in the U.S. Northwest. The illustrative results show that the null hypothesis that the labor demand curve is in fact vertical may not be refuted within this statistical treatment. Positive participation effects of effort, efficiency, safety, employment solidarity, and pollution externalities are shown empirically on the basis of survey responses from workers at 55 U.S. firms ranging in participation from a conventional hierarchy to full labor management (collected along with financial information under a grant from the U.S. Department of Labor). Further, strong evidence is found in support of a "spillover effect," where the level of participation in community political affairs is positively correlated with the level of participation in the firm. In conclusion, the theoretical and empirical findings on labor managed institutions discussed in the dissertation are more speculatively linked to the present and future social and economic role they may play in the absorbtion of externalities and the allocation of public goods. A research program extending this analysis to a labor managed economic environment (such as Yugoslavia or the Mondragon system in Spain) is briefly outlined.