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Works Councils and Plant Closings in Germany

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  • John T. Addison
  • Lutz Bellmann
  • Arnd Kölling

Abstract

This paper is the first study to investigate the impact of workplace representation on plant closings in Germany, using data from a nationally representative establishment panel. Across all establishments in our sample, we find evidence of a positive association between works council presence and plant closings. There is the contrary suggestion that industry‐wide collective bargaining plays a neutral to benign role. As for the interaction between collective bargaining and workplace representation, this appears strongest for establishments with fewer than 50 employees: such plants are much more likely to close if they have a works council and are not covered by a collective agreement.

Suggested Citation

  • John T. Addison & Lutz Bellmann & Arnd Kölling, 2004. "Works Councils and Plant Closings in Germany," British Journal of Industrial Relations, London School of Economics, vol. 42(1), pages 125-148, March.
    • Handle: RePEc:bla:brjirl:v:42:y:2004:i:1:p:125-148
    DOI: 10.1111/j.1467-8543.2004.00307.x
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    1. Bryson, Alex, 2002. "The union membership wage premium: an analysis using propensity score matching," LSE Research Online Documents on Economics 4953, London School of Economics and Political Science, LSE Library.
    2. Barry T. Hirsch, 1991. "Labor Unions and the Economic Performance of Unions," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number luepf, November.
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    Cited by:

    1. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2009. "Works Councils and Separations: Voice, Monopoly, and Insurance Effects," Working Papers 075, Bavarian Graduate Program in Economics (BGPE).
    2. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, June.
    3. Grund, Christian & Martin, Johannes, 2017. "The Role of Works Councils for Severance Payments," IZA Discussion Papers 10750, Institute of Labor Economics (IZA).
    4. Anabela Carneiro & Pedro Portugal, 2008. "Wages and the Risk of Displacement," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 251-276, Emerald Group Publishing Limited.
    5. Addison, John T. & Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2003. "German works councils in the production process," Discussion Papers 21, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    6. John T. Addison, 2005. "The Determinants Of Firm Performance: Unions, Works Councils, And Employee Involvement/High‐Performance Work Practices," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 406-450, July.
    7. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    8. Schultz, Birgit, 2006. "Möglichkeiten und Grenzen des Matching-Ansatzes – am Beispiel der betrieblichen Mitbestimmung," IWH Discussion Papers 15/2006, Halle Institute for Economic Research (IWH).
    9. Daniel Fackler & Claus Schnabel & Jens Stegmaier, 2024. "Personnel adjustments during the Covid-19 pandemic: did co-determination make a difference?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 58(1), pages 1-10, December.
    10. Franz, Wolfgang, 2005. "Die deutsche Mitbestimmung auf dem Prüfstand : Bilanz und Vorschläge für eine Neuausrichtung (The German model of codetermination under test * conclusions and suggestions for reorientation)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 268-283.
    11. Lutz Bellmann & Hans†Dieter Gerner & Richard Upward, 2018. "Job and Worker Turnover in German Establishments," Manchester School, University of Manchester, vol. 86(4), pages 417-445, July.
    12. Daniel Fackler & Claus Schnabel & Joachim Wagner, 2013. "Establishment exits in Germany: the role of size and age," Small Business Economics, Springer, vol. 41(3), pages 683-700, October.
    13. Mohrenweiser, Jens, 2021. "Reconciling the opposing economic effects of works councils across databases," GLO Discussion Paper Series 895, Global Labor Organization (GLO).
    14. Uwe Jirjahn, 2009. "The Introduction of Works Councils in German Establishments — Rent Seeking or Rent Protection?," British Journal of Industrial Relations, London School of Economics, vol. 47(3), pages 521-545, September.
    15. Franz, Wolfgang, 2005. "Die deutsche Mitbestimmung auf dem Prüfstand : Bilanz und Vorschläge für eine Neuausrichtung (The German model of codetermination under test * conclusions and suggestions for reorientation)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 268-283.
    16. Olaf Hübler, 2003. "Fördern oder behindern Betriebsräte die Unternehmensentwicklung?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(4), pages 379-397, November.
    17. Franz, Wolfgang, 2005. "Die deutsche Mitbestimmung auf dem Prüfstand : Bilanz und Vorschläge für eine Neuausrichtung (The German model of codetermination under test * conclusions and suggestions for reorientation)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 268-283.
    18. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, 2012. "Foreign-owned plants and job security," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 89-117, April.
    19. Tony Fang & John S. Heywood, 2006. "Unionization and plant closure in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(4), pages 1173-1194, November.
    20. Addison, John T. & Teixeira, Paulino, 2004. "The Effect of Worker Representation on Employment Behavior in Germany: Another Case of -2.5%," IZA Discussion Papers 1188, Institute of Labor Economics (IZA).
    21. Steffen Mueller & Jens Stegmaier, 2017. "The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 372-395, June.
    22. Schultz Birgit, 2006. "Mikroökonometrische Evaluation der ökonomischen Wirkungen betrieblicher Mitbestimmung - Möglichkeiten und Grenzen des Matching-Ansatzes / Microeconometric Evaluation of Economic Effects of Workers Par," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(5), pages 519-536, October.
    23. Douglas H. Frank, 2014. "Governance Institutions and Adaptation Costs: Evidence from the Fall of the Berlin Wall," Management Science, INFORMS, vol. 60(1), pages 166-187, January.
    24. John T. Addison & Paulino Teixeira & Philipp Grunau & Lutz Bellmann, 2023. "Works council ‘disaffection’ and establishment survivability," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(1), pages 38-67, February.

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