Despite its lack of attractiveness to other countries, the German system of quasi-parity codetermination at company level has held up remarkably well. We recount the theoretical arguments for and against codetermination and survey the empirical evidence on the effects of the institution, tracing the three phases of a still sparse literature. Recent findings hold out the prospect that good corporate governance might include employee representation by virtue of the monitoring function and the reduction in agency costs, while yet cautioning that the optimal level of representation is likely below parity. And although the German system may be better than its reputation among foreigners, it might have to adapt to globalization and the availability of alternative forms of corporate governance in the EU.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
3918.
Find related papers by JEL classification: J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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.
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