TY - UNPB

T1 - Do works councils inhibit investment?

AU - Schank, Thorsten

AU - Schnabel, Claus

AU - Wagner, Joachim

AU - Addison, John T.

PY - 2005

Y1 - 2005

N2 - 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. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment.

AB - 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. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment.

KW - Economics

KW - Betriebsrat

KW - Investitionspolitik

KW - works councils

KW - investment

KW - Germany

M3 - Working papers

T3 - Arbeitsbericht

BT - Do works councils inhibit investment?

PB - Institut für Volkswirtschaftslehre der Universität Lüneburg

CY - Lüneburg

ER -