Separating Introduction Effects from Selectivity Effects: The Differences in Employment Patterns of Co-Determined Firms
31 Pages Posted: 9 Dec 2012
This study examines differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects. Using a difference in differences framework, we show that firms with works councils have higher employment growth before establishing a works council. However, employment growth declines after introduction. We identify the reason for lower employment growth in reduced hiring rates but constant dismissal rates.
Keywords: works councils, hires, dismissals, employment growth, difference-in-differences
JEL Classification: J53, J63, C23, M54
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