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Monitoring Of Workers And Product Market Competition: The Role Of Works Councils

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  • Oliver Gürtler
  • Felix Höffler

Abstract

type="main" xml:id="ecin12182-abs-0001"> Often the consent of worker representations, such as works councils, is required before firms are allowed to install technologies that monitor workers' behavior. Absent monitoring, workers produce low output, while at the same time receiving an information rent. To gain the works council's consent to the installation of a monitoring technology, firms need to compensate workers for the lost information rent. Hence, by making it more costly to produce high output, works councils can serve firms as an instrument to commit to low output levels. This provides a rationale for why works council rights are not opposed more strongly by employers. (JEL D43, D86, J83, L13)

Suggested Citation

  • Oliver Gürtler & Felix Höffler, 2015. "Monitoring Of Workers And Product Market Competition: The Role Of Works Councils," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1366-1379, April.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:2:p:1366-1379
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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