This chapter reviews the economic effects of employee representation with statutory consultation and information rights at the workplace, the works councils. The chapter summarises the international literature which is heavily skewed towards the German case. This review focuses, first, on the...

Most of the literature on the effects of German works councils does not deal with the issue of potential endogeneity of works council existence. Exploiting exogenous variation in works council authority stemming from a 2001 reform of the German Works Constitution Act, I apply a regression...

Using a large panel data set we investigate whether works councils act as sand or grease in the operation of German firms. Stochastic production frontier analysis indicates that establishments with and without a works council do not exhibit significant differences in efficiency.