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Works Council ‘Disaffection’ and Establishment Survivability

Addison, John T.; Teixeira, Paulino; Grunau, Philipp; Bellmann, Lutz


Paulino Teixeira

Philipp Grunau

Lutz Bellmann


This paper investigates the association between a measure of works council heterogeneity and plant closings in Germany, 2006-2015. Two datasets are used to identify failed establishments, while institutional heterogeneity is captured by management perceptions of the role of the works council in managerial decision making and also by allowing for works council learning. The potential moderating role of sectoral collective bargaining is also examined. We report that works councils per se are not associated with plant closure. Rather, it is establishments with disaffected councils that display higher rates of closure. The latter result does not obtain where such establishments are covered by sectoral agreements; an outcome that is consistent with the literature on the mitigation of rent-seeking behavior, and one that also receives support from our finding that plants with dissonant councils are more likely than their consensual counterparts to transition into sectoral bargaining coverage. On the other hand, there is only limited evidence of works council learning.

Journal Article Type Article
Acceptance Date Jun 29, 2022
Online Publication Date Jul 6, 2022
Publication Date 2023-02
Deposit Date Jul 4, 2022
Publicly Available Date Jul 7, 2024
Journal Scottish Journal of Political Economy
Print ISSN 0036-9292
Electronic ISSN 1467-9485
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 70
Issue 1
Pages 38-67
Public URL


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