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The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data

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  • Steffen Mueller
  • Jens Stegmaier

Abstract

We estimate dynamic effects of works councils on labor productivity using newly available information from West German establishment panel data. Conditioning on plant fixed effects and control variables, we find negative productivity effects during the first five years after council introduction, but a steady and substantial increase in the councils' productivity effect thereafter. Given the frequently reported positive correlation between council existence and plant productivity, this finding supports causal interpretations.
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  • 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.
    • Handle: RePEc:bla:brjirl:v:55:y:2017:i:2:p:372-395
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    Cited by:

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    3. Kato, Takao & Kodama, Naomi, 2015. "Work-Life Balance Practices, Performance-Related Pay, and Gender Equality in the Workplace: Evidence from Japan," IZA Discussion Papers 9379, Institute of Labor Economics (IZA).
    4. Daniel Arnold & Tobias Brändle & Laszlo Goerke, 2014. "Sickness Absence and Works Councils - Evidence from German Individual and Linked Employer-Employee Data," IAAEU Discussion Papers 201410, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    5. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    6. Clément Brébion, 2022. "The wage impact of being a works council representative in Germany: A case of strategic discrimination?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 418-455, October.
    7. Simon Jäger & Shakked Noy & Benjamin Schoefer, 2022. "What Does Codetermination Do?," ILR Review, Cornell University, ILR School, vol. 75(4), pages 857-890, August.
    8. Steffen Mueller & Georg Neuschaeffer, 2021. "Worker Participation in Decision‐making, Worker Sorting, and Firm Performance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(4), pages 436-478, October.
    9. Genz, Sabrina & Bellmann, Lutz & Matthes, Britta, 2018. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies?," IZA Discussion Papers 11616, Institute of Labor Economics (IZA).
    10. John T. Addison & Paulino Teixeira, 2020. "Management Practices, Worker Commitment, and Workplace Representation," CESifo Working Paper Series 8329, CESifo.
    11. Boris Hirsch & Steffen Mueller, 2020. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1119-1146, October.
    12. John T. Addison & Paulino Teixeira & Lutz Bellmann, 2023. "Performance and the Conjunction of Better Management Practices and Non-Union Workplace Representation," Journal of Labor Research, Springer, vol. 44(1), pages 1-43, June.
    13. Kerndler, Martin, 2017. "Wage flexibility of older workers and the role of institutions - evidence from the German LIAB data set," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168160, Verein für Socialpolitik / German Economic Association.
    14. John T. Addison & Paulino Teixeira & Lutz Bellmann, 2020. "Management Practices and Establishment Performance under Non-Union Workplace Representation," CESifo Working Paper Series 8599, CESifo.
    15. Mario Bossler & Gregor Geis & Jens Stegmaier, 2018. "Comparing survey data with an official administrative population: assessing sample-selectivity in the IAB Establishment Panel," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(2), pages 899-920, March.
    16. Alexander Lammers & Felix Lukowski & Kathrin Weis, 2023. "The relationship between works councils and firms’ further training provision in times of technological change," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 392-424, June.
    17. Steffen Müller & Jens Stegmaier, 2020. "Why is there resistance to works councils in Germany? An economic perspective," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 41(3), pages 540-561, August.
    18. Pedro Silva Martins, 2019. "The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(4), pages 591-622, October.
    19. Tina Hinz & Jens Mohrenweiser, 2019. "Competition, Institutions and Company-sponsored Training," Economics of Education Working Paper Series 0162, University of Zurich, Department of Business Administration (IBW).
    20. Genz Sabrina & Bellmann Lutz & Matthes Britta, 2019. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies? : First Evidence from the IAB-Establishment Panel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(3), pages 523-564, June.
    21. Hans-Dieter Gerner & Holger Reinemann & Andreas Dutzi & Daniel Ludwig, 2019. "Voraussetzungen und Effekte betrieblicher Interessenvertretung in eigentümergeführten Unternehmen," ZfKE – Zeitschrift für KMU und Entrepreneurship, Duncker & Humblot, Berlin, vol. 67(2), pages 113-144.
    22. KATO Takao & KODAMA Naomi, 2015. "Performance-related Pay and Productivity: Evidence from Japan," Discussion papers 15088, Research Institute of Economy, Trade and Industry (RIETI).
    23. John T. Addison & Paulino Teixeira, 2022. "The Incidence and Outcomes of Industrial Action: New Evidence from the 2019 European Company Survey," CESifo Working Paper Series 9685, CESifo.
    24. Kyoung Yong Kim & Pankaj C. Patel, 2020. "Broad‐Based Employee Ownership and Labour Productivity During the 2008 Recession: Evidence from Public Firms in Europe," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 396-423, June.
    25. 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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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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