Works Councils and Separations: Voice, Monopoly, and Insurance Effects

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Using a large linked employer-employee data set for Germany, we find that the existence of a works council is associated with a lower separation rate to employment, in particular for men and workers with low tenure. While works council monopoly effects show up in all specifications, clear voice effects are only visible for low tenured workers. Works councils also reduce separations to non-employment, and this impact is more pronounced for men. Insurance effects only show up for workers with tenure of more than one year. Our results indicate that works councils primarily represent the interests of a specific clientele. JEL Classification:J53, J63

Monopsonistic competition, low-wage labour markets, and minimum wages – An empirical analysis

“…The point estimate of the presence of a works council is negative in East and West Germany alike, although only statistically significant in the West, which is in line with the literature on workers' voice and the labour turnover rate. For example, Hirsch, Schank and Schnabel (2010b) show for Germany that the separation rate is reduced by the presence of a works council through voice, monopoly (i.e. wage) and insurance effects.…”

Do works councils raise or lower firm productivity?

“…Solving employee dissatisfaction and problems through discussion and negotiation with the management can work to improve labor relations in the establishment and may result in lower rates of resignations and dismissals [8].…”

Trade union membership and dismissals

“…Moreover, Sadowski, Backes-Gellner and Frick (1995) and Frick (1996) find that the existence of a works council reduces dismissals; a claim disputed in Kraft's (2006) replication study. Hirsch, Schank and Schnabel (2010) report that a works council reduces the separation rate, particularly for men. Finally, Schmidt (1991, chap.…”