Working in Public and Private Firms

25 Pages Posted: 14 Oct 2002

See all articles by Giacomo Corneo

Giacomo Corneo

Free University of Berlin (FUB); Universität Osnabrück - Faculty of Business Administration - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Rafael Rob

University of Pennsylvania - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 30, 2001

Abstract

We develop a theoretical framework for comparing incentives, labor productivity and the allocation of effort in public versus private enterprises. We incorporate "socializing", an activity which yields utility for workers and affects a firm's output, into a multitask model of work organization. We establish the two following results. First, the optimal workers' compensation policy displays a larger incentive intensity in the private firm than in the public firm. Second, labor productivity in the private firm may be higher or lower than in the public firm. Both results fit well with the findings of empirical work.

Keywords: Public Enterprise, Privatization, Incentive Schemes

JEL Classification: L32, L33

Suggested Citation

Corneo, Giacomo and Rob, Rafael, Working in Public and Private Firms (October 30, 2001). Available at SSRN: https://ssrn.com/abstract=335740 or http://dx.doi.org/10.2139/ssrn.335740

Giacomo Corneo

Free University of Berlin (FUB) ( email )

Van't-Hoff-Str. 8
D-10785 Berlin, Berlin 14195
Germany

Universität Osnabrück - Faculty of Business Administration - Department of Economics ( email )

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Osnabrueck, D-49069
Germany
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+49 541 969 2722 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

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United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Rafael Rob (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-6775 (Phone)
215-573-2057 (Fax)

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