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The Labor-Managed Firm: Permanent or Start-Up Subsidies?

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  • Loek Groot
  • Daan van der Linde

Abstract

We explore a new argument that seeks to explain the near absence of the labor-managed firm or cooperative, despite a range of inefficiencies attributed to the present-day capitalist firm. We derive the crucial condition for the emergence of labor-managed firms and show that it is unduly restrictive from an efficiency point of view. The policy implication is that public intervention to promote labor-managed firms should primarily be in the form of start-up subsidies rather than in providing permanent tax subsidies.

Suggested Citation

  • Loek Groot & Daan van der Linde, 2017. "The Labor-Managed Firm: Permanent or Start-Up Subsidies?," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(4), pages 1074-1093, October.
    • Handle: RePEc:mes:jeciss:v:51:y:2017:i:4:p:1074-1093
    DOI: 10.1080/00213624.2017.1391592
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    Cited by:

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    2. FitzRoy, Felix & Nolan, Michael A., 2021. "The Inefficiency of Employment and the Case for Workplace Democracy," IZA Discussion Papers 14065, Institute of Labor Economics (IZA).
    3. FitzRoy, Felix & Nolan, Michael A., 2020. "Towards Economic Democracy and Social Justice: Profit Sharing, Co-Determination, and Employee Ownership," IZA Discussion Papers 13238, Institute of Labor Economics (IZA).

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