Wage and Employment Effects of Workplace Representation - A 'Right to Co-Manage' Model

47 Pages Posted: 21 Apr 2010

Date Written: March 1, 2010

Abstract

This paper introduces a two-stage union-oligopoly-council model of wage and employment determination wherein at the first stage wage is negotiated through collective bargaining and at the second stage employment in each firm is co-determined by the employer and its works council. We provide a full characterization of the model outcome for all parameter values of bargaining power and co-determination power. In particular, works councils always increase employment while their impact on wage can be non-monotonic. Overall, individual works councils’ pursuit of own workers’ interests may well harm the workers as a union.

Keywords: Workplace representation, union-oligopoly bargaining, firm-council codetermination

JEL Classification: J50, J54, L13

Suggested Citation

Gu, Yiquan, Wage and Employment Effects of Workplace Representation - A 'Right to Co-Manage' Model (March 1, 2010). Ruhr Economic Paper No. 178, Available at SSRN: https://ssrn.com/abstract=1593471 or http://dx.doi.org/10.2139/ssrn.1593471

Yiquan Gu (Contact Author)

University of Dortmund ( email )

Dortmund, D-44221
Germany

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