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Reconciling the opposing economic effects of works councils across databases

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  • Mohrenweiser, Jens

Abstract

Recent studies on the economic effects of works councils in Germany using the European Company Survey estimate a significant negative effect of works councils on establishment productivity and profitability. These results are in stark contrast to studies using the IAB Establishment Panel estimating a significant positive effect of works councils on establishment productivity and profitability. This article scrutinises these empirical approaches. While sample selection and control variables have a substantial impact on the magnitude of marginal effects, the definition of the dependent variable as an objective or subjective measure causes the opposing signs. Beyond that, similar measures in both datasets lead to comparable marginal effects highlighting the relevance of the definition of the dependent variable for inferences and interpretation of studies about the effectiveness of industrial relations institutions and raising questions about the validity of the performance measures.

Suggested Citation

  • Mohrenweiser, Jens, 2021. "Reconciling the opposing economic effects of works councils across databases," GLO Discussion Paper Series 895, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:895
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    Cited by:

    1. Mohrenweiser, Jens & Pfeifer, Christian, 2024. "Organisational justice, employee representation, and firm performance," GLO Discussion Paper Series 1499, Global Labor Organization (GLO).
    2. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).

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    More about this item

    Keywords

    works councils; codetermination; profitability;
    All these keywords.

    JEL classification:

    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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