COOPERATIVE LABOR ALLOCATION UNDER UNCERTAINTY

Understanding the allocation of labor between collective and private activities within cooperatives has been an issue of interest for economists and policy makers. This paper extends existing literature by incorporating income uncertainty from both private and collective activities, and by assuming that members are risk averse. The analysis suggests a member's labor response to policy parameters can be decomposed into three components: the mean effect, reflecting the labor response under certainty or risk neutrality; the variance effect, reflecting the response to changes in risk; and the wealth effect, reflecting the response to changes in risk aversion associated with changes in wealth. The analysis demonstrates the labor response may be reversed from the certainty or risk neutral case, due to a stronger, opposing variance effect.


Issue Date:
1986
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/13672
Total Pages:
27
Series Statement:
Staff Paper P86-19




 Record created 2017-04-01, last modified 2017-12-10

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