German Works Councils and the Anatomy of Wages
AbstractThis paper provides a comprehensive examination of the effect of German works councils on wages, using matched employer-employee data from the German LIAB for 2001. In general, we find that works councils are associated with higher earnings, even after accounting for worker and establishment heterogeneity. At this level, the works council premium exceeds the collective bargaining mark-up, and is modestly higher in the presence of collective bargaining once we account for worker selection into the two institutions. More specifically, works councils do seem to benefit women relatively and to build on collective bargaining in this regard. They also seem to favor foreign, east-German, and service-sector workers although the effects of collective bargaining are not always reinforcing. The evidence from quantile regressions suggests that only in conjunction with collective bargaining is the narrowing influence of works councils really clear-cut. The above findings pertain to workers in all plants. Once we consider smaller establishments with 21-100 employees, however, each of these results is further qualified, beginning with the effect on wage levels where premia are now only observed in conjunction with collective bargaining.
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Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 11-08.
Date of creation: Jan 2008
Date of revision: Jan 2008
works councils; collective bargaining coverage; matched employer-employee data; wages; wage distribution.;
Other versions of this item:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-30 (All new papers)
- NEP-EEC-2008-07-30 (European Economics)
- NEP-LAB-2008-07-30 (Labour Economics)
- NEP-LTV-2008-07-30 (Unemployment, Inequality & Poverty)
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