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Unions, Works Councils and Plant Closings in Germany

  • Addison, John T.

    ()

    (University of South Carolina)

  • Bellmann, Lutz

    ()

    (Institute for Employment Research (IAB), Nuremberg)

  • Kölling, Arnd

    ()

    (Berlin School of Economics and Law)

This paper present paper provides the first results for Germany on the impact of works councils and collective agreements on plant closings, using data from the IAB establishment panel. We find evidence of a robust positive association between works council presence and plant closures. The strictures of collective agreements do not seemingly affect closings. By the same token, and contrary to some recent findings on other aspects of establishment performance, the presence of a collective agreement does not attenuate the impact of local workplace representation on closings. Our analysis does nothing to encourage a sanguine view of recent legislation in Germany that facilitates the formation of works councils and strengthens their codetermination powers.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 474.

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Length: 33 pages
Date of creation: Apr 2002
Date of revision:
Publication status: published in: British Journal of Industrial Relations, 2004, 42 (1), 125-148
Handle: RePEc:iza:izadps:dp474
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  1. Addison, John T & Chilton, John B, 1998. "Self-Enforcing Union Contracts: Efficient Investment and Employment," The Journal of Business, University of Chicago Press, vol. 71(3), pages 349-69, July.
  2. 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).
  3. Manning, Alan, 1993. "Pre-strike Ballots and Wage-Employment Bargaining," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 422-39, July.
  4. Barry T. Hirsch, 1991. "Labor Unions and the Economic Performance of Unions," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number luepf, March.
  5. 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.
  6. 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 659-94, October.
  7. Alex Bryson, 2002. "The Union Membership Wage Premium: An Analysis Using Propensity Score Matching," CEP Discussion Papers dp0530, Centre for Economic Performance, LSE.
  8. Stewart, Mark B, 1995. "Union Wage Differentials in an Era of Declining Unionization," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 143-66, May.
  9. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  10. Macpherson, D.A. & Dunne, T., 1992. "Unionism and Gross Employment Flows," Working Papers 1992_10_5, Department of Economics, Florida State University.
  11. Fitzroy, Felix R & Kraft, Kornelius, 1987. "Efficiency and Internal Organization: Works Councils in West German Firms," Economica, London School of Economics and Political Science, vol. 54(216), pages 493-504, November.
  12. Bronars, Stephen G & Deere, Donald R, 1993. "Unionization, Incomplete Contracting, and Capital Investment," The Journal of Business, University of Chicago Press, vol. 66(1), pages 117-32, January.
  13. John T. Addison & Paulino Teixeira & Thomas Zwick, 2006. "The Impact of Works Councils on Wages," GEMF Working Papers 2006-08, GEMF - Faculdade de Economia, Universidade de Coimbra.
  14. FitzRoy, Felix R & Kraft, Kornelius, 1985. "Unionization, Wages and Efficiency: Theories and Evidence from the U.S. and West Germany," Kyklos, Wiley Blackwell, vol. 38(4), pages 537-54.
  15. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The Long Awaited Reform of the German Works Constitution Act," IZA Discussion Papers 422, Institute for the Study of Labor (IZA).
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