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German Works Councils and Productivity: First Evidence from a Nonparametric Test

Author

Listed:
  • Joachim Wagner

    (Institute of Economics, University of Lüneburg)

Abstract
This paper presents the first nonparametric test whether German works councils go hand in hand with higher labor productivity or not. It distinguishes between establishments that are covered by collective bargaining or not. Results from a Kolmogorov-Smirnov test for first order stochastic dominance tend to indicate that pro-productive effects are found in firms with collective bargaining only. However, the significance level of the test statistic is higher than a usually applied critical level. This somewhat weak evidence casts doubts on the validity of results from recent parametric approaches using a regression framework that point to high positive effects of works councils on productivity.

Suggested Citation

  • Joachim Wagner, 2005. "German Works Councils and Productivity: First Evidence from a Nonparametric Test," Working Paper Series in Economics 14, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:14
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    References listed on IDEAS

    as
    1. John T. Addison & Claus Schnabel & Joachim Wagner, 2004. "The Course of Research into the Economic Consequences of German Works Councils," British Journal of Industrial Relations, London School of Economics, vol. 42(2), pages 255-281, June.
    2. 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.
    3. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2004. "Works councils - sand or grease in the operation of German firms?," Applied Economics Letters, Taylor & Francis Journals, vol. 11(3), pages 159-161.
    4. Joachim Wagner, 2006. "Exports, foreign direct investment, and productivity: evidence from German firm level data," Applied Economics Letters, Taylor & Francis Journals, vol. 13(6), pages 347-349.
    5. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "The reform of the German works constitution act: a critical assessment," Discussion Papers 16, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    6. Olaf Hübler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, September.
    7. Edward Renshaw, 1995. "Analysis," Challenge, Taylor & Francis Journals, vol. 38(3), pages 53-56, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Works councils; productivity; stochastic dominance;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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