German Works Councils and the Anatomy of Wages

John Addison (), Paulino Teixeira () and Thomas Zwick ()

Working Paper Series from Rimini Centre for Economic Analysis

Abstract: This paper provides a comprehensive examination of the effect of German works councils on wages, using matched employer-employee data from the German LIAB for 2001. In general, we find that works councils are associated with higher earnings, even after accounting for worker and establishment heterogeneity. At this level, the works council premium exceeds the collective bargaining mark-up, and is modestly higher in the presence of collective bargaining once we account for worker selection into the two institutions. More specifically, works councils do seem to benefit women relatively and to build on collective bargaining in this regard. They also seem to favor foreign, east-German, and service-sector workers although the effects of collective bargaining are not always reinforcing. The evidence from quantile regressions suggests that only in conjunction with collective bargaining is the narrowing influence of works councils really clear-cut. The above findings pertain to workers in all plants. Once we consider smaller establishments with 21-100 employees, however, each of these results is further qualified, beginning with the effect on wage levels where premia are now only observed in conjunction with collective bargaining.

Keywords: works councils; collective bargaining coverage; matched employer-employee data; wages; wage distribution. (search for similar items in EconPapers)
JEL-codes: J31 J50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-ifn, nep-lab and nep-ltv
Date: 2008-01, Revised 2008-01

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Related works:
Working Paper: German Works Councils and The Anatomy of Wages (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:rim:rimwps:11-08

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