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Discussion Paper Details

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Title: Working in Public and Private Firms

Author(s): Giacomo Corneo and Rafael Rob

Publication Date: March 2001

Keyword(s): Incentive Schemes, Privatization and Public Enterprise

Programme Area(s): Public Economics

Abstract: We develop a theoretical framework for comparing the style of work in public and private enterprises. We incorporate ?socializing?, as an activity that yields utility for workers and affects a firm?s output, into a simple multitask model of work organization. In contrast with previous models, 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, labour 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.

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Bibliographic Reference

Corneo, G and Rob, R. 2001. 'Working in Public and Private Firms'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2719