Addison, John T. (University of South Carolina and IZA Bonn) Schank, Thorsten (University of Erlangen-Nuremberg) Schnabel, Claus (University of Erlangen-Nuremberg) Wagner, Joachim () (University of Lueneburg, HWWA and IZA Bonn)
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In a sharp break with past German research, some recent estimates have suggested that plants with work councils have 25 to 30 per cent higher productivity than their works-councilfree counterparts. Such findings can only serve to buttress the strong theoretical and policy interest in the German institution, not least in an environment of union decline. In the present paper, we estimate the effects of works councils on productivity, 1997-2000, using a nationally representative German data set. We recoup the works council effect by estimating translog production functions, stochastic frontier production functions, and a model in first differences. Once we focus on a core sample of establishments with 21 to 100 employees in which the powers of the works council are a datum, it emerges that the positive productivity differential is a chimera. By the same token, neither is the effect negative. This result is important in its own right given the sharply opposing findings of past empirical research and the partisan positions these have helped sustain.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
812.
Addison, John T. & Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2003.
"German works councils in the production process,"
Discussion Papers
21, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
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Find related papers by JEL classification: J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
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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