The Politics of Stashing Wealth: The Decline of Labor Power and the Global Rise in Corporate Savings

Redeker, Nils

doi:10.1086/716298

Cited by 12 publications

(10 citation statements)

References 62 publications

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“…Instead, our results are more in line with theories about wage compression following worker representation and information sharing (Western and Rosenfeld, 2011). While we study a pure information-sharing institution, our findings complement a literature asking whether stronger formal codetermination rights permit workers to push for higher wages, which has produced mixed evidence studying, e.g., board-level codetermination in Germany (Kim, Maug, and Schneider, 2018;Gorton and Schmid, 2004;Jäger, Schoefer, and Heining, 2020;Redeker, 2019) and Norway (Blandhol, Mogstad, Nilsson, and Vestad, 2020) or German works councils (Hirsch and Mueller, 2020).…”

Section: Introductionsupporting

confidence: 83%

Voice at Work

Harju

Jäger

Schoefer

2021

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We estimate the effects of worker voice on productivity, job quality, and separations. We study the 1991 introduction of a right to worker representation on boards or advisory councils in Finnish firms, designed primarily to facilitate workforce-management communication. The reform only affected firms with at least 150 employees, permitting a difference-in-differences design to analyze its causal effects. Consistent with information sharing theories, worker voice slightly raised labor productivity, firm survival, and capital intensity. In contrast to the exit-voice theory, we find no effects on voluntary job separations, and at most small positive effects on other measures of job quality (job security, health, subjective job quality, and wages). A 2008 introduction of shop-floor representation had similarly limited effects.

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Section: Introductionsupporting

confidence: 83%

Voice at Work

Harju

Jäger

Schoefer

2021

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“…Note that these findings do not contradict the observations that aggregate corporate debt levels are high in the US(Baines & Hager, 2021;L. E. Davis, 2016), and that corporate saving has trended upward globally(Chen et al, 2017;Redeker, 2021).…”

mentioning

confidence: 41%

Exit, control, and politics: The structural power of finance under asset manager capitalism

Braun¹

2021

Preprint

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Political economists have theorized the structural power of finance as a function of the scarcity of financial capital, which empowers its owners and intermediaries to (threaten) exit. This theory has trouble explaining the non-death of the rentier at a time when financial capital is abundant and lacks a credible exit option. This paper presents a theory updated for a world characterized by financial capital abundance, and by a shift in the predominant function of finance from banking to asset management. Today, asset managers pool financial capital on a scale that often puts them in a position of (near) control, while also maintaining a high degree of portfolio diversification. This defining feature of asset manager capitalism, although observable across asset classes, is most pronounced in the corporate economy. Whereas the control-based dominance of finance capital during the early 20th century was characterized by credit-debt relationships between banks and corporations, today asset managers’ equity holdings dominate; and whereas the shareholder capitalism of the late 20th century was characterized by impatient investors wielding the threat of exit, the power of asset managers in corporate governance is based on their large and illiquid, yet fully diversified shareholdings. Theorizing the structural power of finance as based on control and diversification helps explain both the rentier’s longevity and asset managers’ contribution to that outcome.

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“…Systematic studies have found no empirical evidence that firms manipulate their size in order to avoid codetermination requirements. For example, Lin, Schmid, and Xuan (2018), Kim et al (2019), Blandhol et al (2020), Harju et al (2021), Jäger, Schoefer, et al (2021), and Redeker (forthcoming), covering firms in Germany, Norway, and Finland, found no evidence that firms bunch just below the relevant size thresholds—in contrast to bunching that does appear in response to other size-dependent policies that impose costs on firms (Garicano, Lelarge, and Van Reenen 2016). 6 These facts provide revealed-preference evidence that codetermination does not substantially harm firm performance, at least among firms close to the thresholds.…”

Section: Firm Performancementioning

confidence: 99%

“… 6 We note a tension between the absence of bunching at the 2,000-employee policy threshold in Germany, the threshold for quasi-parity rather than one-third board-level codetermination, which is documented in several papers (Lin et al 2018; Kim et al 2019; Redeker forthcoming), and the findings in Gorton and Schmid (2004), who documented sharp declines in stock market valuation comparing firms above and below the policy threshold (but did not implement a McCrary [2008] test). That is, if quasi-parity codetermination indeed had sharp negative effects on profitability or stock market valuations, then one would expect significant bunching at the 2,000-employee threshold.…”

mentioning

confidence: 91%

What Does Codetermination Do?

Jäger¹,

Noy²,

Schoefer

2021

ILR Review

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The authors provide a comprehensive overview of codetermination, that is, worker representation in firms’ governance and management. The available micro evidence points to zero or small positive effects of codetermination on worker and firm outcomes and leaves room for moderate positive effects on productivity, wages, and job stability. The authors also present new country-level, general-equilibrium event studies of codetermination reforms between the 1960s and 2010s, finding no effects on aggregate economic outcomes or the quality of industrial relations. They offer three explanations for the institution’s limited impact. First, existing codetermination laws convey little authority to workers. Second, countries with codetermination laws have high baseline levels of informal worker voice. Third, codetermination laws may interact with other labor market institutions, such as union representation and collective bargaining. The article closes with a discussion of the implications for recent codetermination proposals in the United States.

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The Politics of Stashing Wealth: The Decline of Labor Power and the Global Rise in Corporate Savings

Cited by 12 publications

References 62 publications

Voice at Work

Voice at Work

Exit, control, and politics: The structural power of finance under asset manager capitalism

What Does Codetermination Do?

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