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Labor in the Boardroom

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  • Simon Jäger
  • Benjamin Schoefer
  • Jörg Heining

Abstract

We estimate the wage effects of shared governance, or codetermination, in the form of a mandate of one third of corporate board seats going to worker representatives. We study a reformin Germany that abruptly abolished this mandate for stock corporations incorporated after August 1994, while it locked the mandate for the slightly older cohorts. Our research design compares firm cohorts incorporated before the reform and after; in a robustness check we additionally draw on the analogous difference in unaffected firm types (LLCs). We find no effects of board-level codetermination on wages and the wage structure, even in firms with particularly flexible wages. The degree of rent sharing and the labor share are also unaffected. We reject that disinvestment could have offset wage effects through the canonical hold-up channel, as shared governance, if anything, increases capital formation.

Suggested Citation

  • Simon Jäger & Benjamin Schoefer & Jörg Heining, 2019. "Labor in the Boardroom," NBER Working Papers 26519, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26519
    Note: CF EFG LE LS POL PR
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    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • J0 - Labor and Demographic Economics - - General
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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