In a sharp break with past German research, some recent estimates have suggested that plants with work councils have 25 to 30 per cent higher productivity than their works-council-free counterparts. Such findings can only serve to buttress the strong theoretical and policy interest in the German...

In its 1998 final report, the German Co-determination Commission identified a large and growing sector of the economy in which employees are covered neither by participation on company boards nor through the vehicle of works councils. The Commission argued that the steady erosion of...

Theory suggests that firms confront a hold-up problem in dealing with workplace unionism: unions will appropriate a portion of the quasi rents stemming from long-lived capital. As a result, firms may be expected to limit their exposure to rent seeking by reducing investments, among other things....

Using quantile regressions and a rich cross section data set for German manufacturing plants, this paper reports that the impact of works councils on labor productivity varies along the conditional distribution of value added per employee. It emerges that the positive and statistically...