Rhineland exit?

We argue in favour of the shareholder model of the firm because assigning the full surplus of the firm to shareholders provides the best possible social insurance by diversifying firmspecificrisks on capital markets. Coordination in wage bargaining and collective norms on what is proper compensation play an important role in reducing the claim of workers on the firm’s surplus. In Denmark, workers bear less firm-specific risk than workers in the United States do. Collective action thus has an important role to play. Politicians, however, face the temptation to please voters and incumbent workers with short-run gains at the expense ofexposing workers to firm-specific risks and reducing future job creation.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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