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Unions, Works Councils and Plant Closings in Germany

Author

Listed:
  • Addison, John T.

    () (University of South Carolina)

  • Bellmann, Lutz

    () (Institute for Employment Research (IAB), Nuremberg)

  • Kölling, Arnd

    () (Berlin School of Economics and Law)

Abstract

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.

Suggested Citation

  • Addison, John T. & Bellmann, Lutz & Kölling, Arnd, 2002. "Unions, Works Councils and Plant Closings in Germany," IZA Discussion Papers 474, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp474
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    References listed on IDEAS

    as
    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 349-369, July.
    2. Bryson, Alex, 2002. "The union membership wage premium: an analysis using propensity score matching," LSE Research Online Documents on Economics 4953, London School of Economics and Political Science, LSE Library.
    3. 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.
    4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    5. repec:mes:challe:v:38:y:1995:i:3:p:53-56 is not listed on IDEAS
    6. Stephen Machin, 1995. "Plant Closures and Unionization in British Establishments," British Journal of Industrial Relations, London School of Economics, vol. 33(1), pages 55-68, March.
    7. 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.
    8. Manning, Alan, 1993. "Pre-strike Ballots and Wage-Employment Bargaining," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 422-439, July.
    9. 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 537-554.
    10. Addison, John T & Schnabel, Claus & Wagner, Joachim, 1996. "German Works Councils, Profits, and Innovation," Kyklos, Wiley Blackwell, vol. 49(4), pages 555-582.
    11. 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.
    12. 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 143-166, May.
    13. 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.
    14. 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 117-132, January.
    15. John T. Addison & Paulino Teixeira & Thomas Zwick, 2006. "The Impact of Works Councils on Wages," GEMF Working Papers 2006-08, GEMF, Faculty of Economics, University of Coimbra.
    16. 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, November.
    17. 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).
    18. Macpherson, D.A. & Dunne, T., 1992. "Unionism and Gross Employment Flows," Working Papers 1992_10_5, Department of Economics, Florida State University.
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    Citations

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    Cited by:

    1. David M. Frankel, 2010. "Rent Seeking and Economic Fragility," Levine's Bibliography 661465000000000159, UCLA Department of Economics.
    2. Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era and After," Oxford Review of Economic Policy, Oxford University Press, vol. 18(4), pages 479-494.
    3. Alda, Holger & Allaart, Piet & Bellmann, Lutz, 2005. "Churning and institutions : Dutch and German establishments compared with micro-level data," IAB Discussion Paper 200512, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    industry/regional collective bargaining; workplace representation; rent seeking;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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