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The Effect of Worker Representation on Employment Behavior in Germany: Another Case of -2.5%

  • Addison, John T.

    ()

    (University of South Carolina)

  • Teixeira, Paulino

    ()

    (University of Coimbra)

Despite recent changes in the relationship between unionism and various indicators of firm performance, there is one seeming constant in the Anglophone countries: unions at the workplace are associated with reduced employment growth of around -2.5% a year. Using German data, we examine the impact of the works council – that country’s form of workplace representation – on employment change, 1993-2001. Works council plants have 2 to 3 percent lower employment growth having controlled for wages, changes in demand, industry affiliation, various worker and establishment characteristics, and survival bias. That said, works councils do not seem to further slow the tortuous pace of employment adjustment in Germany.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1188.

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Length: 29 pages
Date of creation: Jun 2004
Date of revision:
Publication status: published in: Industrial Relations, 2006, 45 (1), 1-25
Handle: RePEc:iza:izadps:dp1188
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  1. Blanchflower, David G & Millward, Neil & Oswald, Andrew J, 1991. "Unionism and Employment Behaviour," Economic Journal, Royal Economic Society, vol. 101(407), pages 815-34, July.
  2. Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," Book chapters authored by Upjohn Institute researchers, in: Rebecca M. Blank (ed.), Social Protection Versus Economic Flexibility: Is There a Trade-off?, pages 59-93 W.E. Upjohn Institute for Employment Research.
  3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  4. Montgomery, Edward, 1989. "Employment and Unemployment Effects of Unions," Journal of Labor Economics, University of Chicago Press, vol. 7(2), pages 170-90, April.
  5. Richard B. Freeman & Edward P. Lazear, 1994. "An Economic Analysis of Works Councils," NBER Working Papers 4918, National Bureau of Economic Research, Inc.
  6. John T. Addison & Lutz Bellmann & Arnd Kölling, 2004. "Works Councils and Plant Closings in Germany," British Journal of Industrial Relations, London School of Economics, vol. 42(1), pages 125-148, 03.
  7. Burgess, Simon & Knetter, Michael & Michelacci, Claudio, 2000. "Employment and Output Adjustment in the OECD: A Disaggregate Analysis of the Role of Job Security Provisions," Economica, London School of Economics and Political Science, vol. 67(267), pages 419-35, August.
  8. Machin, Stephen J & Wadhwani, Sushil, 1991. "The Effects of Unions on Organisational Change and Employment," Economic Journal, Royal Economic Society, vol. 101(407), pages 835-54, July.
  9. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "German Works Councils Old and New: Incidence, Coverage and Determinants," IZA Discussion Papers 495, Institute for the Study of Labor (IZA).
  10. Addison, John T. & Belfield, Clive R., 2002. "Unions and Establishment Performance: Evidence from the British Workplace Industrial/Employee Relations Surveys," IZA Discussion Papers 455, Institute for the Study of Labor (IZA).
  11. David Blanchflower & Simon Burgess, 1996. "New Technology and Jobs: Comparative Evidence from a Two Country Study," CEP Discussion Papers dp0285, Centre for Economic Performance, LSE.
  12. Booth, Alison L & McCulloch, Andrew, 1999. "Redundancy Pay, Unions and Employment," Manchester School, University of Manchester, vol. 67(3), pages 346-66, June.
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