Standard economic theory predicts that the accumulation of capital by means of indivisible reserves would lead to underinvestment and undercapitalization due to the truncated temporal horizon of worker members in cooperatives (the so called Furubotn-Pejovich effect). To test the real effects of collective capital on productivity, we use a large panel of Italian worker and social cooperatives to estimate the productivity effects of collective and individual reserves of capital. The panel puts together firm-level balance sheet data from Bureau van Dijk Aida database, with social security data concerning employment contracts in all Italian enterprises. Differently from previous contributions, we are able to single out firm-level employment in terms of full-time worker equivalents. We investigate the determinants of total factor productivity by means of an augmented Cobb-Douglas production function. After controlling for factor productivity, individual capital ownership, age of the organization and other standard firm-level and sectoral controls, we find a positive and significant relation between the extent of collective ownership and total factor productivity. This result is robust to different specifications of the model. We interpret the result by highlighting the positive role of collective capital in strengthening financial sustainability, patrimonial and employment stability in the long run, and in favouring specific investments.

Key words: cooperatives; total factor productivity; self-finance; undercapitalization; collective capital; individual capital. Key words: labour productivity; self-finance; undercapitalization; collective capital; individual capital.