This paper measures the productivity impact of management-led participative establishment practices. On the basis of a representative German establishment data set, the IAB establishment panel, the study finds that the presence of team-work, a reduction of hierarchies and autonomous work groups in 1997 significantly increases average establishment productivity in 1997 ? 2000. An endogeneous switching regression model takes the endogeneity of work councils into account and shows that the productivity effect can only be measured in establishments with works councils, i.e. employee induced participation. The estimation strategy controls for unobserved time invariant establishment heterogeneity by using a two-step system GMM panel regression approach. It simultaneously controls for endogeneity of participative work organization by using instrument variable regressions. --
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number
03-47.
Find related papers by JEL classification: J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
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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