Competition Between For-Profit and Non-Profit Firms: Incentives, Workers’ Self-Selection, and Wage Differentials

Barigozzi, Francesca ; Burani, Nadia (2016) Competition Between For-Profit and Non-Profit Firms: Incentives, Workers’ Self-Selection, and Wage Differentials. Bologna: Dipartimento di Scienze economiche DSE, p. 53. DOI 10.6092/unibo/amsacta/5354. In: Quaderni - Working Paper DSE (1072). ISSN 2282-6483.
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Abstract

We study optimal non-linear contracts offered by two firms competing for the exclusive services of workers, who are privately informed about their ability and motivation. Firms differ in their organizational form, and motivated workers are keen to be hired by the non-profit firm because they adhere to its mission. If the for-profit firm has a competitive advantage over the non-profit firm, the latter attracts fewer high-ability workers with respect to the former. Moreover, workers exert more effort at the for-profit than at the non-profit firm despite the latter distorts effort levels upwards. Finally, a wage penalty emerges for non-profit workers which is partly due to compensating effects (labor donations by motivated workers) and partly due to the negative selection of ability into the non-profit firm. The opposite results hold when it is the non-profit firm that has a competitive advantage.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Barigozzi, FrancescaUniversità di Bologna0000-0002-4071-5161
Burani, NadiaUniversità di Bologna0000-0001-7111-4302
Keywords
non-profit firms, multi-principals, intrinsic motivation, skills, bidimensional adverse selection, wage differential
Subjects
ISSN
2282-6483
DOI
Deposit date
18 Jul 2016 16:03
Last modified
08 May 2017 13:21
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