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Higher Wages, Overstaffing or Both? The Employer's Assessment of Problems Regarding Wage Costs and Staff Level in Co-Determined Establishments

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  • Gralla, Rafael

    ()
    (TU Dortmund)

  • Kraft, Kornelius

    ()
    (TU Dortmund)

Abstract

This study examines the differences in the likelihood of overpayment and overemployment in establishments with and without works councils. In contrast to other studies, we use assessments by the management concerning the existence of such problems. Furthermore, we also analyze how different types of works councils influence the probability of overemployment and overpayment. Using the wave 2006 of the IAB Establishment Panel, we show that establishments with works councils that are prepared to interfere with the management are more likely to suffer from overemployment but do not differ in the likelihood of overpayment compared to establishments without works councils. Establishments with works councils that are in line with the management, however, do not differ from establishments without a works council with regard to the likelihood of overemployment but have a lower likelihood of overpayment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7021.

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Length: 32 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7021

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Keywords: works councils; wages; employment;

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References

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  1. Olaf H¸bler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, 09.
  2. Christian Pfeifer, 2011. "The Heterogeneous Economic Consequences of Works Council Relations," Working Paper Series in Economics 203, University of Lüneburg, Institute of Economics.
  3. Alexander Dilger, 2006. "Kooperation zwischen Betriebsrat und Management, Die Sicht beider Seiten und deren Folgen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(5), pages 562-587, September.
  4. Addison, John T. & Schnabel, Claus & Wagner, Joachim, 2003. "The Course of Research into the Economic Consequences of German Works Councils," IZA Discussion Papers 878, Institute for the Study of Labor (IZA).
  5. Michael Beckmann & Silvia Föhr & Matthias Kräkel, 2010. "Rent Seeking, Employment Security, and Works Councils: Theory and Evidence for Germany," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 62(1), pages 2-40, January.
  6. Carola M. Frege, 2002. "A Critical Assessment of the Theoretical and Empirical Research on German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 40(2), pages 221-248, 06.
  7. Fitzroy, Felix R & Kraft, Kornelius, 1987. "Efficiency and Internal Organization: Works Councils in West German Firms," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 54(216), pages 493-504, November.
  8. FitzRoy, Felix R & Kraft, Kornelius, 1985. "Unionization, Wages and Efficiency: Theories and Evidence from the U.S. and West Germany," Kyklos, Wiley Blackwell, vol. 38(4), pages 537-54.
  9. John T. Addison & Paulino Teixeira & Thomas Zwick, 2007. "German Works Councils and The Anatomy of Wages," Working Paper Series, The Rimini Centre for Economic Analysis 13-07, The Rimini Centre for Economic Analysis, revised Jul 2007.
  10. A.L. Keith Acheson, 2010. "Globalization," Carleton Economic Papers 10-01, Carleton University, Department of Economics.
  11. Uwe Jirjahn, 2011. "Ökonomische Wirkungen der Mitbestimmung in Deutschland: Ein Update," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 131(1), pages 3-57.
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