Worker Cooperatives and Development: A Business Cycle Analysis

The 2030 Agenda for Sustainable Development and the achievement of sustainable development goals represent a new challenge for economic systems, directly involving productive sectors in this process. Alternative organizational models of production could play an important role in promoting sustainable development. This paper conducts a comparative analysis of traditional capitalist firms and workers’ cooperatives within a general equilibrium framework. We investigate whether cooperative firms are more sustainable than capitalist firms and how governance models impact voluntary abatement activity throughout the business cycle. To address this, we employ two distinct Dynamic Stochastic General Equilibrium models: one populated by cooperative firms and the other by capitalist firms. Our findings indicate that, after a productivity shock, cooperative firms prioritize immediate consumption and environmental goals, demonstrating a higher initial increase in both consumption and abatement efforts. In contrast, capitalist firms focus on increasing labor hours and investment, resulting in a more significant immediate rise in production.