Works Councils and Heterogeneous Firms

Simon Renaud

No 16/2006, Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) from Friedrich Schiller University of Jena, School of of Economics and Business Administration

Abstract: Theoretical analyses of the effects of works councils show ambiguous results. Therefore an empirical investigation of the issue is inevitable. The results so far are mixed, frequently a positive effect on productivity, but a negative one on profits is found. The problem of both theoretical and empirical studies is the assumption of firm homogeneity. To close this gap, we take into account firm heterogeneity proxied by the percentage of highly qualified employees in the workforce. The theoretical result that the positive productivity effect is more pronounced in firms with well-defined majorities is confirmed in the empirical part of the paper. The results on profitability are less favourable for works councils: in those firms where the productivity effect is significant, the profitability effect is negative, except for firms with a very high percentage of highly qualified employees. Turning to the effect of collective agreements, they seem to mitigate the problem of reduced profitability in firms with no clear majority in the structure of qualifications.

Keywords: firm heterogeneity; works councils; productivity; profitability; IAB Establishment-Panel (search for similar items in EconPapers)
JEL-codes: J42 J50 (search for similar items in EconPapers)
Date: 2006-05-21
New Economics Papers: this item is included in nep-bec
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:jen:jenasw:2006-16

Access Statistics for this paper

More papers in Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) from Friedrich Schiller University of Jena, School of of Economics and Business Administration
Bibliographic data for series maintained by Markus Pasche ().