Do Works Councils Inhibit Investment?

John Addison, Thorsten Schank, Claus Schnabel and Joachim Wagner ()
Additional contact information
Joachim Wagner: Leuphana University Lüneburg

No 1473, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Theory suggests that firms confront a hold-up problem in dealing with workplace unionism: unions will appropriate a portion of the quasi rents stemming from long-lived capital. As a result, firms may be expected to limit their exposure to rent seeking by reducing investments, among other things. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment.

Keywords: investment; works councils; Germany (search for similar items in EconPapers)
JEL-codes: J50 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published - published in: Industrial and Labor Relations Review, 2007, 60 (2), 187-203

Downloads: (external link)
https://docs.iza.org/dp1473.pdf (application/pdf)

Related works:
Journal Article: Do Works Councils Inhibit Investment? (2007)
Working Paper: Do Works Councils Inhibit Investment? (2005)
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:iza:izadps:dp1473

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().