The course of research into the economic consequences of German works councils

In a recent survey, Frege (2002) concludes that economic analysis of the works council has reached a `dead end´. The present treatment offers a different conclusion based on a more encompassing review of the evidence. It will identify three distinct phases in the economic analysis of codetermination at the workplace. While Frege just considered studies from the first two phases, it is the third phase of research that contains some of the most positive evaluations to date of works council impact. Even if such estimates appear much exaggerated and the effect of works councils is likely to be small on average, the new literature redirects our research effort towards the factors that produce swings around this average, including differences in works council types and their workplace environments.