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Why is there resistance to works councils in Germany? An economic perspective

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  • Müller, Steffen
  • Stegmaier, Jens

Abstract

Recent empirical research generally finds evidence of positive economic effects of works councils, for example with regard to productivity and - with some limitations - to profits. This makes it necessary to explain why employers' associations have reservations against works councils. On the basis of an in-depth literature analysis, we show that beyond the generally positive findings, there are important heterogeneities in the impact of works councils. We argue that those groups of employers that tend to benefit little from employee participation in terms of productivity and profits may well be important enough to shape the agenda of their employers' organisation and even gained in importance within their organisations in recent years. We also discuss the role of deviations from profit-maximising behaviour like risk aversion, short-term profit maximisation, and other non-pecuniary motives, as possible reasons for employer resistance.

Suggested Citation

  • Müller, Steffen & Stegmaier, Jens, 2017. "Why is there resistance to works councils in Germany? An economic perspective," IWH Discussion Papers 23/2017, Halle Institute for Economic Research (IWH).
  • Handle: RePEc:zbw:iwhdps:232017
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hirsch, Boris & Müller, Steffen, 2018. "Firm wage premia, industrial relations, and rent sharing in Germany," IWH Discussion Papers 2/2018, Halle Institute for Economic Research (IWH).
    2. Genz, Sabrina & Bellmann, Lutz & Matthes, Britta, 2018. "Do German Works Councils Counter or Foster the Implementation of Digital Technologies?," IZA Discussion Papers 11616, Institute of Labor Economics (IZA).
    3. Boris Hirsch & Steffen Müller, 2018. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," CESifo Working Paper Series 6890, CESifo Group Munich.
    4. John T. Addison & Paulino Teixeira & Philipp Grunau & Lutz Bellmann, 2019. "Dissonant Works Councils and Establishment Survivability," CESifo Working Paper Series 7722, CESifo Group Munich.
    5. Addison, John T. & Teixeira, Paulino & Grunau, Philipp & Bellmann, Lutz, 2019. "Dissonant Works Councils and Establishment Survivability," IZA Discussion Papers 12438, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    employers' association; plant level employee participation; works council;

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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