Worker participation in decision-making, worker sorting, and firm performance

Arbeitspapier

Worker participation in decision-making is often associated with high-wage and high-productivity firm strategies. Using linked-employer-employee data for Germany and worker fixed effects from a two-way fixed effects model of wages capturing observed and unobserved worker quality, we find that establishments with formal worker participation via works councils indeed employ higher-quality workers. We show that worker quality is already higher in plants before council introduction and further increases after the introduction. Importantly, we corroborate previous studies by showing positive productivity and profitability effects even after taking into account worker sorting.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 11/2020

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials
• Subject: works councils ; worker sorting ; worker quality ; between-firm wage inequality ; productivity ; profits

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Müller, Steffen ; Neuschäffer, Georg
• Event: Veröffentlichung
• (who): Halle Institute for Economic Research (IWH)
• (where): Halle (Saale)
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/222292
• URN: urn:nbn:de:101:1-2020071511000371234439
• Last update: 10.03.2025, 11:41 AM CET