Equity ownership gives labor both a fractional stake in the firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly-traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly,...

Equity ownership gives labor both a fractional stake in a firm's residual cash flows and a voice in corporate governance. Relative to other firms, labor-controlled publicly traded firms deviate more from value maximization, invest less in long-term assets, take fewer risks, grow more slowly,...

This paper describes what economists know, suspect, and guess about the underlying determinants of innovation. It evaluates the evidence and points out areas where further work is urgently needed. In many cases, no solid conclusions can be drawn. Though the reader may find this frustrating,...