Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

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

Kjell Arne Brekke () and Karine Nyborg ()
Additional contact information
Kjell Arne Brekke: The Ragnar Frisch Centre for Economic Research, Postal: Gaustadalléen 21, N-0349 Oslo, Norway
Karine Nyborg: The Ragnar Frisch Centre for Economic Research, Postal: Gaustadalléen 21, N-0349 Oslo, Norway

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 firm’s 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

JEL-codes: D21; D62; D64; J31; Q50; Z13

32 pages, April 6, 2005

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Published as
Kjell Arne Brekke 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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