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Works Councils and Separations: Voice, Monopoly, and Insurance Effects





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       The authors’ affiliation is Friedrich–Alexander–Universität Erlangen–Nürnberg, Lehrstuhl für Arbeitsmarkt- und Regionalpolitik, Lange Gasse 20, 90403 Nürnberg, Germany. E-mail: The authors would like to thank two referees and an editor of this journal as well as Uwe Jirjahn and Joachim Wagner for helpful comments and suggestions. We are also grateful for comments received at the Annual Congress of the Verein für Socialpolitik in September 2009 in Magdeburg.


Using a large linked employer–employee data set for Germany, we find that the existence of a works council is associated with a lower separation rate to employment, in particular for workers with low tenure. While works council monopoly effects show up in all specifications, clear voice effects are only visible for low tenured workers. Works councils also reduce separations to nonemployment, and this impact is more pronounced for men. Insurance effects only show up for workers with tenure of more than 2 years. Our results indicate that works councils to some extent represent the interests of a specific clientele.