We analyse the interaction between different labour market institutions in Germany, a country with a long tradition of strong bargaining partners. A number of studies have established that industry-level bargaining exerts a moderating role on firm-level co-determination: works councils generate...

This paper provides the first full examination of the effect of German works councils on wages using matched employer-employee data (specifically, the LIAB for 2001). We find that works councils are associated with higher earnings. The wage premium is around 11 percent (and is higher under...

German law guaranteeing works councils is not a datum. The thrust of legislation has changed significantly on a number of occasions since 1920. The most recent legal change in the form of the Works Constitution Reform Act marks a controversial swing in favor of works council formation and...