A model by Huebler and Jirjahn (2003) suggests that rent-seeking activities of works councils are more limited in establishments covered by collective bargaining. The model predicts that works councils should have a stronger productivity effect and a weaker wage effect in covered than in...

Using unique survey data from the German Socio-Economic Panel, this study examines the influence of reciprocal inclinations on workers' sorting into codetermined firms. Employees with strong negative reciprocal inclinations are more likely to work in firms with a works council while employees...

German works councils provide a highly developed mechanism for codetermination designed to increase trust and cooperation within firms. This study examines whether or not the functioning of works councils depends on the type of ownership. Comparing domestic- and foreign-owned firms in Germany,...

Using German establishment data, this study provides the first econometric analysis on the interaction of establishment-level codetermination and foreign owners. Works councils are associated with higher productivity in domestic-owned establishments while they are associated with lower...