The Participation of the Workers in the Income of the Company. An Analysis of Efficiency

Abstract

In this paper the employment relationship is analyzed in a conventional capitalist company. The starting point is the type of private information related to the kind of work carried out by the employee. This results in the contractual relationship between the businessman and the worker creates a problem relative to the effort that the worker dedicates to the company. In this paper two possible alternative solutions are studied: supervision on the part of the businessman and the participation in company revenue on the part of the worker, comparing both solutions with the first-best. The main conclusion of our analysis is the technical superiority of the participative company over the hierarchic one due to the saving in supervising expenses.