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Department of Economics, University of Oslo Memorandum

No 25/2004:
Moral hazard and moral motivation: Corporate social responsibility as labor market screening

Kjell Arne Brekke () and Karine Nyborg ()

Abstract: Morally motivated individuals behave more cooperatively than predicted by standard theory. Hence,if a firm can attract workers who are strongly motivated by ethical concerns, moral hazard problems like shirking can be reduced. We show that employers may be able to use the firmís corporate social responsibility profile as a screening device to attract more productive workers. Both pooling and separating equilibria are possible. Even when a substantial share of the workers have no moral motivation whatsoever, such screening may in fact drive every firm with a low social responsibility profile out of business.

Keywords: Self-image; teamwork; shirking; voluntary abatement; (follow links to similar papers)

JEL-Codes: D21; D62; D64; J31; Q50; Z13; (follow links to similar papers)

32 pages, April 6, 2005

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This paper is published as:
Brekke, Kjell Arne and Karine Nyborg, (2008), 'Attracting Responsible Employees: Green Production as Labor Market Screening', Resource and Energy Economics, Vol. 30, pages 509-526

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