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Works Councils and Separations: Voice, Monopoly, and Insurance Effects

Listed author(s):
  • Hirsch, Boris

    ()

    (Leuphana University Lüneburg)

  • Schank, Thorsten

    ()

    (University of Mainz)

  • Schnabel, Claus

    ()

    (University of Erlangen-Nuremberg)

Using a large linked employer-employee data set for Germany, we find that the existence of a works council is associated with a lower separation rate to employment, in particular for men and workers with low tenure. While works council monopoly effects show up in all specifications, clear voice effects are only visible for low tenured workers. Works councils also reduce separations to non-employment, and this impact is more pronounced for men. Insurance effects only show up for workers with tenure of more than one year. Our results indicate that works councils primarily represent the interests of a specific clientele.

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File URL: http://ftp.iza.org/dp4126.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4126.

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Length: 28 pages
Date of creation: Apr 2009
Publication status: published in: Industrial Relations, 2010, 49 (4), 566-592
Handle: RePEc:iza:izadps:dp4126
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References listed on IDEAS
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  1. Anja Heinze & Elke Wolf, 2010. "The intra-firm gender wage gap: a new view on wage differentials based on linked employer–employee data," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(3), pages 851-879, June.
  2. John T. Addison & Paulino Teixeira, 2005. "The Effect of Works Councils on Employment Change," GEMF Working Papers 2005-06, GEMF, Faculty of Economics, University of Coimbra.
  3. Kornelius Kraft, 2006. "On Estimating the Effect of Co-Determination on Personnel Turnover," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(2), pages 287-305.
  4. repec:pri:indrel:dsp01gq67jr170 is not listed on IDEAS
  5. Jaap H. Abbring & Gerard J. Van Den Berg, 2007. "The unobserved heterogeneity distribution in duration analysis," Biometrika, Biometrika Trust, vol. 94(1), pages 87-99.
  6. 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.
  7. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "German works councils old and new: incidence, coverage and determinants," Discussion Papers 10, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  8. Bernhard Boockmann & Susanne Steffes, 2010. "Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany?," ILR Review, Cornell University, ILR School, vol. 64(1), pages 109-127, October.
  9. repec:rim:rimwps:13-07 is not listed on IDEAS
  10. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, 06.
  11. Jonas Agell, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, Verein für Socialpolitik, vol. 3(2), pages 107-135, 05.
  12. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, "undated". "Foreign-owned Plants and Job Security," Discussion Papers 07/36, University of Nottingham, GEP.
  13. Gartner, Hermann & Stephan, Gesine, 2004. "How collective contracts and works councils reduce the gender wage gap," IAB Discussion Paper 200407, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  14. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2008. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Working Papers 1111, Princeton University, Department of Economics, Industrial Relations Section..
  15. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany.
  16. 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.
  17. 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.
  18. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers 16, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  19. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  20. Boris Hirsch & Thorsten Schank & Claus Schnabel, 2010. "Differences in Labor Supply to Monopsonistic Firms and the Gender Pay Gap: An Empirical Analysis Using Linked Employer-Employee Data from Germany," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 291-330, 04.
  21. Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  22. Hübler, Olaf & Jirjahn, Uwe, 2001. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," IZA Discussion Papers 322, Institute for the Study of Labor (IZA).
  23. Addison, John T. & Belfield, Clive R., 2003. "Union Voice," IZA Discussion Papers 862, Institute for the Study of Labor (IZA).
  24. 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.
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