Co‐determination, Efficiency and Productivity

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Co-Determination, Efficiency, and Productivity Felix R. FitzRoy Kornelius Kraft D I S C U S S I O N P A P E R S E R I E S Forschungsinstitut zur Zukunft der ArbeitInstitute for the Study ABSTRACT Co-Determination, Efficiency, and Productivity *We present the first panel estimates of the productivity effects of the unique German institution of parity, board-level co-determination. Although our data span two severe recessions when labour hoarding costs of co-determination are probably highest, and the panel is too short to capture the likely long run benefits in terms of human capital formation and job satisfaction, we find positive productivity effects of the 1976 extension to parity codetermination in large firms. Conference, University of Bristol, the 3 rd DFG-colloquium on industrial economics and input markets, and the University of Essen, particularly Jan Askildsen, Stephen Smith, Murat Sertel and Olaf Hübler for helpful comments and discussion. Two referees provided very useful comments on an earlier version. We are also very grateful to Gregor Brüggelambert and Antonia Niederprüm for excellent research assistance and the Deutsche Forschungsgemeinschaft for financial support.

The Economic Consequences of One-third Co-determination in German Supervisory Boards

“…While some have not found any effects, others have identified positive relationships between co-determination and productivity (FitzRoy & Kraft, 2005;Renaud, 2007), and others negative relationships (Gurdon & Rai, 1990;FitzRoy & Kraft, 1993). Svejnar (1982) and Wagner (2009) found no significant impact on productivity.…”

Socially-Optimal Level of Co-Determination of Labor and the European Directive on Workers' Councils

“…A study of Mizrahi, Shlomo (2002) argues that firms efficiency, stability and workers participation can be achieved through participatory decision rules therefore government intervention is considered to be marginal throughout. Relying Council Directive (EWC) (8) gave embodiment of the European model of representation that covers transnational companies that work in EU. The directive's basic requirement is am establishment of a procedure for information and consultation between workers and the firm (Hogler, 1996).…”

“…The distributional effect will lead workers to demand degree of empowerment that exceeds social optimum. Socially optimal levels of codetermination may be prevented by the existence of high fixed costs of establishing councils (3) As Fitz Roy and Kraft (2005) show the effect on co-determination on productivity, job satisfaction variable and efficiency (4) .…”

The Shadow Economy in International Comparison: Options for Economic Policy Derived from an OECD Panel Analysis

“…However, the overwhelming part of the empirical literature on this issue, namely usually individual country studies, does not find significant negative but rather positive effects of labor participation rights on economic performance, for instance, on productivity (e.g. Fitzroy and Kraft, 2005). The index of employee participation rights used here is the first attempt to condense the available information on these rights in the 38 countries of this study (see the publications of the European Trade Union Institute, ETUI, in Brussels), in an index on a scale with merely 3 units.…”