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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 the first comprehensive examination of the effect of German works councils on wages, using matched employer-employee data from the German LIAB for 2001. We find that works councils are associated with higher earnings: the wage premium is around 11 percent, and is higher under formal collective bargaining. This result persists after taking account of worker and establishment heterogeneity and the endogeneity of works council presence. Using quantile regressions, we further report that the works council premium is decreasing in the position of the worker in the wage distribution; and is higher for women than for men. Finally, the works council wage premium is associated with longer job tenure, which suggests that some of the premium is a noncompetitive rent. That said, it remains entirely possible that works council 'voice' may dominate its distributive effects, at least insofar as the tenure result is concerned.

Keywords: matched employer-employee data; rent seeking; tenure; wages; wage distribution; works councils; collective bargaining (search for similar items in EconPapers)
JEL-codes: J31 J50 (search for similar items in EconPapers)
Date: 2007-07, Revised 2007-07
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Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp13_07.pdf

Related works:
Journal Article: German Works Councils and the Anatomy of Wages (2010) Downloads
Working Paper: German Works Councils and the Anatomy of Wages (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:13_07

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