IDEAS home Printed from https://ideas.repec.org/a/sae/ilrrev/v63y2010i2p247-270.html
   My bibliography  Save this article

German Works Councils and the Anatomy of Wages

Author

Listed:
  • John T. Addison
  • Paulino Teixeira
  • Thomas Zwick

Abstract

Using matched employer-employee data from the German LIAB for 2001, the authors found that German works councils are in general associated with higher earnings, even after accounting for establishment- and worker heterogeneity. Works council wage premia exceed those of collective bargaining and are higher, in fact, where both institutions are present in the workplace. The authors also found evidence indicating that works councils benefit women relative to men and appear to favor foreign, east-German, and service-sector workers as well. Separate evidence from quantile regressions suggests that the conjunction of works council presence and collective bargaining is important to the narrowing process. In smaller plants even the presence of a works council markup depends on the coexistence of the works council entity with the machinery of collective bargaining.

Suggested Citation

  • John T. Addison & Paulino Teixeira & Thomas Zwick, 2010. "German Works Councils and the Anatomy of Wages," ILR Review, Cornell University, ILR School, vol. 63(2), pages 247-270, January.
  • Handle: RePEc:sae:ilrrev:v:63:y:2010:i:2:p:247-270
    as

    Download full text from publisher

    File URL: http://ilr.sagepub.com/content/63/2/247.abstract
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bernd Fitzenberger & Karsten Kohn & Alexander C. Lembcke, 2013. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," ILR Review, Cornell University, ILR School, vol. 66(1), pages 169-197, January.
    2. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics," Introductory Chapters,in: Robert Gibbons & John Roberts (ed.), The Handbook of Organizational Economics Princeton University Press.
    3. Richard B. Freeman, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 643-673.
    4. Joan Muysken & Thomas Zwick, 2006. "Wage Divergence and Unemployment: The Impact of Wage Setting Power and Training Costs," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(1), pages 1-19.
    5. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, March.
    6. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-593, October.
    7. 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, September.
    8. John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2006. "Works Councils in the Production Process," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(2), pages 251-283.
    9. Bender, Stefan & Haas, Anette & Klose, Christoph, 2000. "IAB Employment Subsample 1975-1995 Opportunities for Analysis Provided by the Anonymised Subsample," IZA Discussion Papers 117, Institute for the Study of Labor (IZA).
    10. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-694, October.
    11. Richard B. Freeman, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits," NBER Working Papers 0242, National Bureau of Economic Research, Inc.
    12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    13. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
    14. Zwick, Thomas, 2004. "Employee participation and productivity," Labour Economics, Elsevier, vol. 11(6), pages 715-740, December.
    15. Gesine Stephan & Knut Gerlach, 2005. "Wage settlements and wage setting: results from a multi-level model," Applied Economics, Taylor & Francis Journals, vol. 37(20), pages 2297-2306.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samuel Muehlemann & Harald Pfeifer, 2016. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 193-218, April.
    2. Uwe JIRJAHN & Stephen C. SMITH, 2018. "Nonunion Employee Representation: Theory And The German Experience With Mandated Works Councils," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 201-233, March.
    3. John T. Addison & Paulino Teixeira & Thomas Zwick, 2009. "Rent Seeking at Plant Level: An Application of the Card-De la Rica Tenure Model to Workers in German Works Councils," Working Paper series 12_09, Rimini Centre for Economic Analysis.
    4. Merkl, Christian & Stüber, Heiko, 2016. "Wage cyclicalities and labor market dynamics at the establishment level: Theory and evidence," FAU Discussion Papers in Economics 12/2016, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    5. Boris Hirsch & Steffen Müller, 2018. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," CESifo Working Paper Series 6890, CESifo Group Munich.
    6. Boris Hirsch & Thomas Zwick, 2015. "How Selective Are Real Wage Cuts? A Micro-analysis Using Linked Employer–Employee Data," LABOUR, CEIS, vol. 29(4), pages 327-347, December.
    7. Harald Pfeifer, 2014. "Absenteeism in Apprenticeships: What Role Do Works Councils Play?," Economics of Education Working Paper Series 0098, University of Zurich, Department of Business Administration (IBW), revised Aug 2015.
    8. Arnold, Daniel & Brändle, Tobias & Goerke, Laszlo, 2013. "Sickness Absence, Works Councils, and Personnel Problems. Evidence from German Individual and Linked Employer-Employee Data," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79906, Verein für Socialpolitik / German Economic Association.
    9. Laszlo Goerke & Sabrina Jeworrek, 2016. "Paid Vacation Use - The Role of Works Councils," IAAEU Discussion Papers 201601, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    10. Christian Grund & Andreas Schmitt, 2013. "Works councils, wages and job satisfaction," Applied Economics, Taylor & Francis Journals, vol. 45(3), pages 299-310, January.
    11. Steffen Mueller & Jens Stegmaier, 2017. "The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 372-395, June.
    12. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2009. "Works Councils and Separations: Voice, Monopoly, and Insurance Effects," IZA Discussion Papers 4126, Institute for the Study of Labor (IZA).
    13. Cecilia Navarra & Ermanno Tortia, 2014. "Employer Moral Hazard, Wage Rigidity, and Worker Cooperatives: A Theoretical Appraisal," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 707-726.
    14. Kerndler, Martin, 2017. "Wage flexibility of older workers and the role of institutions - evidence from the German LIAB data set," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168160, Verein für Socialpolitik / German Economic Association.
    15. Müller, Steffen & Stegmaier, Jens, 2017. "Why is there resistance to works councils in Germany? An economic perspective," IWH Discussion Papers 23/2017, Halle Institute for Economic Research (IWH).
    16. Burdín, Gabriel & Pérotin, Virginie, 2016. "Employee Representation and Flexible Working Time," IZA Discussion Papers 10437, Institute for the Study of Labor (IZA).
    17. Daniel Arnold & Tobias Brändle & Laszlo Goerke, 2014. "Sickness Absence and Works Councils - Evidence from German Individual and Linked Employer-Employee Data," IAW Discussion Papers 107, Institut für Angewandte Wirtschaftsforschung (IAW).
    18. Uwe Jirjahn, 2015. "Research on Trade Unions and Collective Bargaining in Germany: The Contribution of Labor Economics," Research Papers in Economics 2015-10, University of Trier, Department of Economics.
    19. Mark Harcourt & Helen Lam & Richard Croucher, 2015. "The right-to-manage default rule," Industrial Relations Journal, Wiley Blackwell, vol. 46(3), pages 222-235, May.
    20. Grund, Christian & Martin, Johannes, 2017. "The Role of Works Councils for Severance Payments," IZA Discussion Papers 10750, Institute for the Study of Labor (IZA).
    21. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series 0057, University of Zurich, Department of Business Administration (IBW).
    22. Uwe Jirjahn, 2016. "Works Councils and Employer Attitudes toward the Incentive Effects of HRM Practices," Research Papers in Economics 2016-07, University of Trier, Department of Economics.

    More about this item

    JEL classification:

    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ilrrev:v:63:y:2010:i:2:p:247-270. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: http://www.ilr.cornell.edu .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.