Risk and Lack of Diversification under Employee Ownership and Shared Capitalism

Joseph R. Blasi, Douglas L. Kruse and Harry M. Markowitz

in Shared Capitalism at Work

Published by University of Chicago Press

Published in print May 2010 | ISBN: 9780226056951
Published online February 2013 | e-ISBN: 9780226056968 | DOI:
Risk and Lack of Diversification under Employee Ownership and Shared Capitalism

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This chapter discusses the impact of subjective risk on workers' attitudes, preferences, and behaviors under shared capitalism and whether employee ownership and other forms of worker equity participation be consistent with proper diversification and shared capitalism. The three components of a worker's economic insecurity score are the size of each worker's fixed annual pay, how many multiples each worker's total wealth (minus debt) is relative to that worker's fixed annual pay, and the extent to which each worker perceives they are competitively paid in the firm where they work. It has been demonstrated that as economic insecurity of workers rises, it is associated with worse worker attitudes toward shared capitalism, preferences for variable pay, and behavioral outcomes under shared capitalist arrangements. The level of economic insecurity also influences how well they actually respond to shared capitalist arrangements such as employee ownership in their workplace.

Keywords: shared capitalism; employee ownership; diversification; annual pay; economic insecurity; risk

Chapter.  13154 words.  Illustrated.

Subjects: Economic History

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