Do Works Councils Inhibit Investment ?

Schank T, Addison JT, Schnabel C, Wagner J (2007)

Publication Type: Journal article

Publication year: 2007

Journal

Industrial & Labor Relations Review Industrial & Labor Relations Review

Publisher: Industrial & Labor Relations Review

Book Volume: 60

Pages Range: 187-203

Journal Issue: 2

Abstract

Theory suggests that firms confront a hold-up problem in dealing with workplace unionism: unions will appropriate a portion of the quasi rents stemming from long-lived capital. As a result, firms may be expected to limit their exposure to rent seeking by reducing investments, among other things. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment.

Authors with CRIS profile

Thorsten Schank Lehrstuhl für Volkswirtschaftslehre, insbesondere Arbeitsmarkt- und Regionalpolitik Claus Schnabel Lehrstuhl für Volkswirtschaftslehre, insbesondere Arbeitsmarkt- und Regionalpolitik

Involved external institutions

Leuphana Universität Lüneburg DE Germany (DE) University of South Carolina US United States (USA) (US)

How to cite

APA:

Schank, T., Addison, J.T., Schnabel, C., & Wagner, J. (2007). Do Works Councils Inhibit Investment ? Industrial & Labor Relations Review, 60(2), 187-203.

MLA:

Schank, Thorsten, et al. "Do Works Councils Inhibit Investment ?" Industrial & Labor Relations Review 60.2 (2007): 187-203.

BibTeX: Download