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Works Councils and Separations: Voice, Monopoly, and Insurance Effects

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  • Hirsch, Boris

    ()
    (University of Erlangen-Nuremberg)

  • Schank, Thorsten

    ()
    (University of Mainz)

  • Schnabel, Claus

    ()
    (University of Erlangen-Nuremberg)

Abstract

Using a large linked employer-employee data set for Germany, we find that the existence of a works council is associated with a lower separation rate to employment, in particular for men and workers with low tenure. While works council monopoly effects show up in all specifications, clear voice effects are only visible for low tenured workers. Works councils also reduce separations to non-employment, and this impact is more pronounced for men. Insurance effects only show up for workers with tenure of more than one year. Our results indicate that works councils primarily represent the interests of a specific clientele.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4126.

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Length: 28 pages
Date of creation: Apr 2009
Date of revision:
Publication status: published in: Industrial Relations, 2010, 49 (4), 566-592
Handle: RePEc:iza:izadps:dp4126

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Keywords: duration models; works council; separations; collective voice; Germany;

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References

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  1. Agell, Jonas, 2001. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," Research Papers in Economics, Stockholm University, Department of Economics 2001:12, Stockholm University, Department of Economics.
  2. Addison, John T. & Schnabel, Claus & Wagner, Joachim, 2003. "The course of research into the economic consequences of German works councils," Discussion Papers, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics 22, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  3. John T. Addison & Lutz Bellmann & Arnd Kölling, 2004. "Works Councils and Plant Closings in Germany," British Journal of Industrial Relations, London School of Economics, London School of Economics, vol. 42(1), pages 125-148, 03.
  4. Addison, John T. & Belfield, Clive R., 2003. "Union Voice," IZA Discussion Papers 862, Institute for the Study of Labor (IZA).
  5. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany.
  6. John T. Addison & Paulino Teixeira & Thomas Zwick, 2010. "German Works Councils and the Anatomy of Wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(2), pages 247-270, January.
  7. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2010. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 28(2), pages 291-330, 04.
  8. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, . "Foreign-owned Plants and Job Security," Discussion Papers 07/36, University of Nottingham, GEP.
  9. Bernhard Boockmann & Susanne Steffes, 2010. "Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(1), pages 109-127, October.
  10. Jaap H. Abbring & Gerard J. van den Berg, 2006. "The Unobserved Heterogeneity Distribution in Duration Analysis," Tinbergen Institute Discussion Papers, Tinbergen Institute 06-059/3, Tinbergen Institute.
  11. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics 16, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  12. Hübler, Olaf & Jirjahn, Uwe, 2001. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," IZA Discussion Papers 322, Institute for the Study of Labor (IZA).
  13. Kornelius Kraft, 2006. "On Estimating the Effect of Co-Determination on Personnel Turnover," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 126(2), pages 287-305.
  14. Gartner, Hermann & Stephan, Gesine, 2004. "How collective contracts and works councils reduce the gender wage gap," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200407, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  15. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "German Works Councils Old and New: Incidence, Coverage and Determinants," IZA Discussion Papers 495, Institute for the Study of Labor (IZA).
  16. John T. Addison & Paulino Teixeira, 2005. "The Effect of Works Councils on Employment Change," GEMF Working Papers, GEMF - Faculdade de Economia, Universidade de Coimbra 2005-06, GEMF - Faculdade de Economia, Universidade de Coimbra.
  17. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  18. 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.
  19. Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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Citations

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Cited by:
  1. Hirsch, Boris & Schnabel, Claus, 2010. "Women move differently: Job separations and gender," IWQW Discussion Paper Series, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW) 06/2010, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  2. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0057, University of Zurich, Institute for Strategy and Business Economics (ISU).
  3. Uwe Jirjahn & Jens Mohrenweiser & Uschi Backes-Gellner, 2010. "Works Councils and Learning: On the Dynamic Dimension of Codetermination," Research Papers in Economics, University of Trier, Department of Economics 2010-06, University of Trier, Department of Economics.
  4. Laszlo Goerke & Markus Pannenberg, 2010. "Trade Union Membership and Dismissals," CESifo Working Paper Series 3196, CESifo Group Munich.
  5. Grund, Christian & Schmitt, Andreas, 2013. "Works Councils, Quits and Dismissals in Germany," IZA Discussion Papers 7361, Institute for the Study of Labor (IZA).
  6. Tobias Brändle, 2013. "Flexible Collective Bargaining Agreements: Still a Moderating Effect on Works Council Behaviour?," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 96, Institut für Angewandte Wirtschaftsforschung (IAW).
  7. Harald Pfeifer, 2014. "Absenteeism in Apprenticeships: What Role Do Works Councils Play?," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0098, University of Zurich, Institute for Strategy and Business Economics (ISU).
  8. Samuel Muehlemann & Harald Pfeifer, 2012. "The structure of hiring costs in Germany - evidence from firm-level data," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0077, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Sep 2013.
  9. Hirsch, Boris & Mueller, Steffen, 2010. "Temporary agency work and the user firm's productivity: First evidence from German Panel Data," Discussion Papers, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics 68, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  10. Uschi Backes-Gellner & Jens Mohrenweiser & Kerstin Pull, 2011. "When Does Regulation Bite? Co-Determination and the Nature of Employment Relations," Working Papers, University of Zurich, Institute for Strategy and Business Economics (ISU) 0147, University of Zurich, Institute for Strategy and Business Economics (ISU).
  11. Jung, Sven, 2012. "Employment adjustment in German firms," Discussion Papers, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics 80, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  12. Ellguth, Peter & Gerner, Hans-Dieter & Stegmaier, Jens, 2012. "Wage bargaining in Germany : the role of works councils and opening clauses," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201205, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  13. Jung, Sven, 2013. "Employment Adjustment in German Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 79696, Verein für Socialpolitik / German Economic Association.

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