Moral Hazard and Moral Motivation: Corporate Social Responsibility as Labor Market Screening

University of Oslo Economics Working Paper No. 25/2004

32 Pages Posted: 10 Jan 2005

See all articles by Karine Nyborg

Karine Nyborg

University of Oslo - Department of Economics; IZA Institute of Labor Economics

Kjell Arne Brekke

University of Oslo - Department of Economics; University of Oslo - Frisch Center

Date Written: October 2004

Abstract

Morally motivated individuals behave more cooperatively than predicted by standard theory. Hence, if a firm can attract workers who are strongly motivated by ethical concerns, moral hazard problems like shirking can be reduced. We show that employers may be able to use the firm's corporate social responsibility profile as a screening device to attract more productive workers. Both pooling and separating equilibria are possible. Even when a substantial share of the workers have no moral motivation whatsoever, such screening may in fact drive every firm with a low social responsibility profile out of business.

Keywords: Teamwork, green firms, worker motivation

JEL Classification: D21, D62, D64, J31, Q50, Z13

Suggested Citation

Nyborg, Karine and Brekke, Kjell Arne, Moral Hazard and Moral Motivation: Corporate Social Responsibility as Labor Market Screening (October 2004). University of Oslo Economics Working Paper No. 25/2004, Available at SSRN: https://ssrn.com/abstract=645741 or http://dx.doi.org/10.2139/ssrn.645741

Karine Nyborg (Contact Author)

University of Oslo - Department of Economics ( email )

P.O.Box 1095 Blindern
Oslo, N-0317
Norway

HOME PAGE: http://folk.uio.no/karineny/

IZA Institute of Labor Economics ( email )

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

Kjell Arne Brekke

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47 22 84 11 69 (Phone)

University of Oslo - Frisch Center ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47 22 95 88 19 (Phone)
+47 22 95 88 25 (Fax)

HOME PAGE: www.frisch.uio.no

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