Worker participation in decision-making, worker sorting, and firm performance

Steffen Müller and Georg Neuschäffer
Authors registered in the RePEc Author Service: Steffen Mueller

No 11/2020, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Worker participation in decision-making is often associated with high-wage and high-productivity firm strategies. Using linked-employer-employee data for Germany and worker fixed effects from a two-way fixed effects model of wages capturing observed and unobserved worker quality, we find that establishments with formal worker participation via works councils indeed employ higher-quality workers. We show that worker quality is already higher in plants before council introduction and further increases after the introduction. Importantly, we corroborate previous studies by showing positive productivity and profitability effects even after taking into account worker sorting.

Keywords: works councils; worker sorting; worker quality; between-firm wage inequality; productivity; profits (search for similar items in EconPapers)
JEL-codes: J24 J31 J5 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Worker Participation in Decision‐making, Worker Sorting, and Firm Performance (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:112020

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