HUMAN-CAPITAL, PROPERTY-RIGHTS, AND LABOR-MANAGED FIRMS

Acquiring skill is costly and, in the presence of some degree of specificity, not totally transferable between firms. If it is impossible to sign complete contracts between a profit-maximising firm and its workers, and/or the workers value future income less than do capitalists, labour-managed and profit-maximising firms will undertake different levels of human capital investment. We show how skill levels and the degree of generality of training depend both on contractual arrangements and on discount factors. Workers in a labour-managed firm will tend to acquire skill which is more general, and may have a higher skill level, than workers employed by profit-maximising firms.