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Works Councils, Labor Productivity and Plant Heterogeneity: Evidence from Quantile Regressions

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Author Info

  • Wagner, Joachim

    ()
    (Leuphana University Lüneburg)

  • Addison, John T.

    ()
    (University of South Carolina)

  • Schnabel, Claus

    ()
    (University of Erlangen-Nuremberg)

  • Schank, Thorsten

    ()
    (University of Mainz)

Abstract

Using quantile regressions and a rich cross section data set for German manufacturing plants, this paper reports that the impact of works councils on labor productivity varies along the conditional distribution of value added per employee. It emerges that the positive and statistically significant effect of works council presence estimated by ordinary least squares now vanishes for large parts of this distribution. According to our results, such an effect can only be detected in plants at the top end of the conditional productivity distribution – plants that can be considered ‘over achievers.’ We would speculate that this might be because only highly competent managers can cooperate with a works council in a way that much enhances productivity.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1414.

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Length: 19 pages
Date of creation: Nov 2004
Date of revision:
Publication status: published in: Jahrbücher für Nationalökonomie und Statistik , 2006, 226 (5), 505-518
Handle: RePEc:iza:izadps:dp1414

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Keywords: quantile regressions; works councils; labor productivity; heterogeneous firms;

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References

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  1. Richard B. Freeman & Edward P. Lazear, 1995. "An Economic Analysis of Works Councils," NBER Chapters, in: Works Councils: Consultation, Representation, and Cooperation in Industrial Relations, pages 27-52 National Bureau of Economic Research, Inc.
  2. Mahmut Yasar & Carl H. Nelson & Roderick Rejesus, 2003. "Productivity and Exporting Status of Manufacturing Firms: Evidence from Quantile Regressions," Emory Economics 0323, Department of Economics, Emory University (Atlanta).
  3. 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, 06.
  4. Raul A. Barreto & Anthony W. Hughes, 2004. "Under Performers and Over Achievers: A Quantile Regression Analysis of Growth," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 17-35, 03.
  5. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
  6. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
  7. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers 16, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  8. Sophia Dimelis & Helen Louri, 2002. "Foreign ownership and production efficiency: a quantile regression analysis," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 449-469, July.
  9. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-94, October.
  10. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
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Cited by:
  1. Addison, John T., 2005. "The Determinants of Firm Performance: Unions, Works Councils, and Employee Involvement/High Performance Work Practices," IZA Discussion Papers 1620, Institute for the Study of Labor (IZA).
  2. Fathi Fakhfakh & Virginie Perotin & Monica Gago, 2011. "Productivity, Capital and Labor in Labor-Managed and Conventional Firms," TEPP Working Paper 2011-08, TEPP.
  3. Fathi Fakhfakh & Virginie Perotin & Monica Gago, 2012. "Productivity, Capital, and Labor in Labor-Managed and Conventional Firms in France," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 65(4), pages 847-879, October.
  4. Joachim Wagner & Thorsten Schank & Claus Schnabel & John T. Addison, 2006. "Works Councils, Labor Productivity and Plant Heterogeneity: First Evidence from Quantile Regressions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(5), pages 505-518, September.
  5. Fakhfakh F. & Perotin V. & Gago M., 2009. "Productivity, Capital and Labor in Labor-Managed and Conventional Firms," Working Papers ERMES 0910, ERMES, University Paris 2.

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