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IZA
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Works Councils, Labor Productivity and Plant Heterogeneity: Evidence from Quantile Regressions
by
Joachim Wagner, John T. Addison, Claus Schnabel, Thorsten Schank
(November 2004)
published in: Jahrbücher für Nationalökonomie und Statistik , 2006, 226 (5), 505-518
Abstract:
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 significant effect of works council presence estimated by ordinary least squares
now vanishes for large parts of this distribution. According to our results, such an effect can
only be detected in plants at the top end of the conditional productivity distribution – plants
that can be considered ‘over achievers.’ We would speculate that this might be because only
highly competent managers can cooperate with a works council in a way that much enhances
productivity.
Text: See Discussion Paper No. 1414
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