An Economic Analysis of Works Councils

Richard Freeman and Edward Lazear

No 4918, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Works councils, found in most Western European economies, are elected bodies of employees with rights to information, consultation, and in some cases co-determination of employment conditions at local workplaces, mandated by law. Many European employers and unions believe that councils improve communication between workers and management, raising social output, while reducing the speed with which decisions are made. This paper analyzes the operation of councils as a means of improving social output by creating more cooperative labor relations. It argues that councils are mandated because the incentive for companies to institute them and delegate them power falls short of the social incentive; that workers provide more accurate information to employers about preferences when councils have some say over how that information is used; and that the communication from employers to workers produces socially desirable worker concessions in bad times that would not occur absent this institution. It compares a jury style random selection of works councilors with selection via elections.

Date: 1994-11
Note: LS
References: View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Published as "An Economic Analysis of Works Councils." Works Councils: Consultation, Representation and Cooperation in Industrial Relations University of Chicago Press, 1996. Eds. Joel Rogers and Wolfgang Streeck.
Published as An Economic Analysis of Works Councils , Richard B. Freeman, Edward P. Lazear. in Works Councils: Consultation, Representation, and Cooperation in Industrial Relations , Rogers and Streeck. 1995

Downloads: (external link)
http://www.nber.org/papers/w4918.pdf (application/pdf)

Related works:
Chapter: An Economic Analysis of Works Councils (1995)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:4918

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4918

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().