Co-determination and innovation

Kornelius Kraft, Jörg Stank and Ralf Dewenter

Cambridge Journal of Economics, 2011, vol. 35, issue 1, 145-172

Abstract: This paper examines the effect of the German co-determination law of 1976 (MitbestG) on the innovative activity of German firms. Co-determination applies to firms with 2,000 employees or more. Data from 1971--1976 and 1981--1990 on 148 firms are used to compare the number of patents granted to co-determined firms before and after the introduction of the law. Several control variables are applied and in particular, in order to avoid a possible bias from specific effects of firm size, we compare the co-determined firms with others before and after 1976. The results do not support the view that co-determination slows down technological progress and reduces innovativity. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Date: 2011
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