The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data

Abstract

We estimate dynamic effects of works councils on labour productivity using newly available information from West German establishment panel data. Conditioning on plant fixed effects and control variables, we find negative productivity effects during the first five years after council introduction but a steady and substantial increase in the councils’ productivity effect thereafter. Our findings support a causal interpretation for the positive correlation between council existence and plant productivity that has been frequently reported in previous studies.

Do German Works Councils Counter or Foster the Implementation of Digital Technologies?

“…Thus, we formulate the first hypothesis: As works councils are commissioned to mediate between opposing interest of management and workforce (Section 2 WCA), they might particularly show active participation if one of the two parties is exposed to difficulties and requires the mediating role of works councils. Works councils might fulfill their role as an important channel for bottomup communication (Müller/Stegmaier 2017a) if the employees are confronted with concerns. Employees might claim such active engagement of works councils if a large proportion of the workforce suffers from high physical strain at the workplace.…”

Why is there resistance to works councils in Germany? An economic perspective

“…This suggests difficulties experienced by the works council when taking up the work. However, Müller and Stegmaier (2016) also conclude that works councils are set up in establishments that previously demonstrated poor economic development. It cannot be ruled out that the learning phase may be short and that the initially negative effect is spurious and is primarily a product of the critical situation in the establishment.…”

Broad‐Based Employee Ownership and Labour Productivity During the 2008 Recession: Evidence from Public Firms in Europe

“…We also controlled for firm capital , measured as the log of total firm capital (measured in million euros), which was available from the EFES database. Because firm size may be associated with higher workforce productivity, we controlled for the log of the number of employees (Müller and Stegmaier ). Past research shows that research and development (R&D) expenditures of a firm are associated with labour productivity (e.g.…”