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The Effect of Works Councils on Employment Change

Authors

  • JOHN T. ADDISON,

    1. Department of Economics, Moore School of Business, University of South Carolina, 1705 College Street Columbia, SC
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  • PAULINO TEIXEIRA

    1. Universidade de Coimbra, Av. Dias da Silva, 165 3000 Coimbra Portugal
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    • *

      The authors’ affiliations are, respectively, Department of Economics, Moore School of Business, University of South Carolina, 1705 College Street Columbia, SC; and Paulino Teixeira Faculdade de Economia, Universidade de Coimbra, Av. Dias da Silva, 165 3000 Coimbra Portugal. E-mail: ecceaddi@moore.sc.edu or Paulinot@fe.uc.pt. The authors thank, without implicating, David Blanchflower for his helpful comments on an earlier draft of this paper. We are also much indebted to one of the editors of this journal and two anonymous reviewers for their constructive suggestions.


Abstract

Despite recent changes in the relationship between unionism and various indicators of firm performance, there is one seeming constant in the Anglophone countries: unions at the workplace are associated with reduced employment growth of around −2.5% a year. Using German data, we examine the impact of the works council—that country's form of workplace representation—on employment change from 1993 to 2001. The German institution appears to have much the same negative effect on employment growth. That said, survival bias seems to play a small role, and works councils do not seem to further slow the tortuous pace of employment adjustment in Germany.

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