Works councils and organizational gender policies in Germany

While education and labour force participation of women have been increased, there is still a substantial gender gap in labour market opportunities. This gives rise to the question of what factors lead employers to promote work–family balance and gender equality. We address this question by examining the influence of works councils on the gender policies of establishments in Germany. Using data of the IAB Establishment Panel, we find that the incidence of a works council is on average associated with an increased likelihood that an establishment provides family‐friendly practices and promotes equal opportunities of men and women. This finding also holds in a recursive multivariate probit model that accounts for potential endogeneity of works council incidence. However, our estimates also show that the influence of works councils is heterogeneous. Performing separate estimate by collective bargaining status, we find a significant influence of works councils only for establishments covered industry‐level collective bargaining agreements, but not for establishments covered by firm‐level agreements or establishments not covered by collective bargaining.