This paper focuses on Italian worker cooperatives and on their use of collective accumulation of capital in order to provide a sort of local public good to their members.

A distinguishing feature of Italian worker cooperatives is that members, though owners of the firm, cannot be seen as residual claimants: the distribution of profits on the basis of capital stakes is limited by law; accumulated reserves cannot be shared among members even at the end of the life of the cooperative; the practice of ristorno (distribution of part of the net residual to members on the basis of the work relationship) is weakly applied, that means that most of net profits are accumulated into indivisibles reserves, a completely collective fund, that means that the most of profits aren’t privately appropriated.

This is striking from the economist’s perspective because a huge accumulation in an indivisible and non-appropriable pool seems to violate the need for a proper incentive scheme, both concerning work effort and investment (because of the well-known “Furubotn-Pejovich effect”). I therefore approach this choice of collective investment by means of empirical investigation carried out in the workers’ cooperatives associated with the Lega delle Cooperative e Mutue in the province of Ravenna (Italy). My methodology consists of the matching of three sources of data: balance-sheets quantitative data at the firm level; qualitative interviews of the cooperative board members; a first-hand survey by means of questionnaires to a sample of workers.

After having argued that the main usual explanations may not be exhaustive enough, here I propose a different explanation, based on an insurance argument. The starting point is the observation of a remarkable stability of employment in worker cooperatives. This can be attained in two ways: one possible way, that has quite a strong background literature, is that cooperatives search the stabilization of employment by making the wages fluctuate (a “reversed implicit contract” idea). The second, on the other hand, is that members choose to “tax” themselves in each period, thus earning lower wages, in order to accumulate in a collective fund, to be used in case of downturns (“risk-pooling argument”). This role can be played by indivisible reserves. Here, I propose an empirical test of these tools and I try to broaden my argument, in order to include other possible factors that enter into the decision of non distributing profits (the time horizon of members within the firm and the existence of some elements of “we-rationality”, that is the self-recognition of members in a sort of collective agent).

This work has two main aims: the first is to develop the employment insurance purpose of worker cooperatives; the second is to introduce the “embeddedness” of these practices in a system of relationships: the insurance argument ceases to be an individual concern, to become an element of the collective identity, that has a sound historical evidence and that still (even if not unambiguously) shows up in the survey data.