This paper analyzes the possibility of creating worker cooperatives in which members are paid not through wages but through dividends calculated on the organization's residual income, as stipulated by the economic theory of the labor-managed firm. It is shown how dividends paid to members can be...

The literature on labor-managed firms identifies the source of under-capitalization in the Furubotn–Pejovich effect. Appropriable capital accounts can counteract the horizon problem, but they engender little-examined problems connected with the distribution, reinvestment, and reimbursement of...