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Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001

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  • Julian B. Adam

Abstract

Most of the literature on the effects of German works councils doesnot deal with the issue of potential endogeneity of works council existence. Exploiting exogenous variation in works council authority stemming from a 2001 reform of the German Works Constitution Act, I apply a regression difference-in-difference using establishment panel data. I find that increasing works council size and the introduction of one full-time councilor causally reduces the number of voluntary quits by about 30 percent. This decline is driven entirely by collective voice effects and there is no evidence for monopoly effects in place. Similar to the findings of previous research, the effect is significant only in establishments which are subject to a collective agreement. The results suggest that the effectiveness of works councils either heavily relies on the support of unions, or that works councils mainly serve as a guardian of collective agreements.

Suggested Citation

  • Julian B. Adam, 2018. "Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001," Working Papers 179, Bavarian Graduate Program in Economics (BGPE).
    • Handle: RePEc:bav:wpaper:179_adam
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    References listed on IDEAS

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    6. Richard B. Freeman & Edward P. Lazear, 1995. "An Economic Analysis of Works Councils," NBER Chapters, in: Works Councils: Consultation, Representation, and Cooperation in Industrial Relations, pages 27-52, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    works councils; codetermination; industrial relations; quits; collective bargaining;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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