Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages

By O. Hübler, Uwe Jirjahn. Social Science Research Network, 2003

318 citations recorded by the source corpus.

This paper investigates the interaction between establishment-level codetermination and industry-level collective bargaining in Germany. Based on a simple bargaining model we derive our main hypothesis: In establishments covered by collective bargaining agreements works councils are more likely to be engaged in productivity enhancing activities and less engaged in rent seeking activities than their counterparts in uncovered firms. Using data from German manufacturing establishments, our empirical analysis confirms this hypothesis. The presence of works councils exerts a positive impact on productivity within the covered industrial relations regime but not within the uncovered industrial relations regime. In contrast, the presence of works councils has a positive effect on wages within the uncovered industrial relations regime but not to the same degree within the covered industrial relations regime.

Subfields: Economics and Econometrics, Political Science and International Relations, Public Administration

View Paper: https://www.semanticscholar.org/paper/6adc3cfb143e0be646911ec67bf678580cae8539

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Citations in the corpus

The Course of Research into the Economic Consequences of German Works Councils (2004, unknown): “Hübler and Jirjahn (2003) Pooled data from the 1994 and 1996 waves of the Hannover Firm Panel (see text).”
Hiring older workers and employing older workers: German evidence (2010, result): “7 This four-way division also matches the treatment of works councils and unions in the literature examining the broader productivity effects of works councils ( Huebler and Jirjahn 2003 ).”
Collective Bargaining Structure and its Determinants: An Empirical Analysis with British and German Establishment Data (2006, result): “IABDiscussionPaper No. 16/2005 19 (see, e.g., Franz and Pfeiffer, 2001; Lehmann, 2002; Hübler and Jirjahn, 2003).”
Employee participation and productivity (2004, unknown): “It is therefore possible that works councils weaken the full productivity effects of more participative work forms in order to reduce the negative impact on the employees (Hübler and Jirjahn, 2003).”
Collective and individual voice: convergence in Europe? (2007, background): “Thus, mutually reinforcing forms of voice may coexist in some systems, optimizing employee wages and working conditions, productivity and organizational performance (Hubler and Jirjahn, 2003).”
Unions and Productivity, Financial Performance and Investment: International Evidence (2002, background): “Huebler and Jirjahn (2001) measured the effect of collective bargaining coverage on the rent-seeking behaviour of works councils and hence on the impact of works councils on firm performance.”
German Works Councils and the Anatomy of Wages (2010, methodology): “Using two waves of the Hannoveraner Firmenpanel , Hübler and Jirjahn (2003) offer a test of the Freeman-Lazear (1995) model that, where a council either coexists with or is embedded in a collective bargaining agreement, councils and local management are likely to maximize the joint surplus.”
Do Works Councils Inhibit Investment? (2007, unknown): “By the same token, the wide jurisdiction of the works council means that it has real bargaining power, and unsurprisingly wages have been shown to be higher in establishments with works councils (e.g. Addison, Schnabel, and Wagner, 2001; Hübler and Jirjahn, 2003).”