Seminar 6: Employment relations and organization of the firm (16.11)

I.
Finish the last part of the exercises on emplyment relations

II.
Consider a competitive industry consisting of two types of firms that differ in their productivity. Firms are either organized as i) traditional capitalist firms or ii) worker‐owned firms. Assume that worker effort is equal across ownership structures.

1. Changing the ownership structure from capitalist firms to worker owned firms:
   1. What is the impact on employment and labor income in different types of firms?
   2. Are workers in the most productive firms better off if they have to fully compensate prior capitalist owners?
   3. Could there be reasons why well organized workers may not have to fully compensate the capitalist owner? Hint: What other threats could the owner face?
2. Changing the ownership structure from worker owned firms to capitalist firms:
   1. Explain why a capitalist may take over a coop, fully compensate owners and still make pure profits.
   2. If this is a realistic description of the world, what would happen to the share of cooperatives relative to traditional firms?
   3. Discus reasons why the argument from a) may not hold?