Abstract
Parallels are drawn between the approach to the theory of individual labor supply used by Sen (“Labor Allocation in a Co-operative Enterprise.” Rev. Econ. Stud. 33: 361–371, Oct. 1966) and approaches of more recent contributions. The paper considers questions of comparative statics in a general model and attempts to distinguish between behavior in labor-managed firms and profit-maximizing firms. Diagrammatic analysis is used for a simple case where income effects are absent. Questions of efficiency and comparative statics are studied in the short run (membership fixed) and in the medium term (membership variable). Finally an incentive scheme to promote efficiency is described.
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