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The Dynamic Effects of Works Councils on Labor Productivity: First Evidence from Panel Data

We estimate dynamic effects of works councils on labor productivity using newly available information from West German establishment panel data. Conditioning on plant fixed effects and control variables, we find negative productivity effects during the first five years after council introduction, but a steady and substantial increase in the councils’ productivity effect thereafter. Given the frequently reported positive correlation between council existence and plant productivity, this finding supports causal interpretations.

10. September 2015

Autoren Steffen Müller

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The Dynamic Effects of Works Councils on Labour Productivity: First Evidence from Panel Data

Steffen Müller Jens Stegmaier

in: British Journal of Industrial Relations, Nr. 2, 2017

Abstract

We estimate dynamic effects of works councils on labour productivity using newly available information from West German establishment panel data. Conditioning on plant fixed effects and control variables, we find negative productivity effects during the first five years after council introduction but a steady and substantial increase in the councils’ productivity effect thereafter. Our findings support a causal interpretation for the positive correlation between council existence and plant productivity that has been frequently reported in previous studies.

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