Separating Introduction Effects from Selectivity Effects: The Differences in Employment Patterns of Co-Determined Firms

31 Pages Posted: 9 Dec 2012

See all articles by Rafael Gralla

Rafael Gralla

Technical University of Dortmund

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Abstract

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

Suggested Citation

Gralla, Rafael and Kraft, Kornelius, Separating Introduction Effects from Selectivity Effects: The Differences in Employment Patterns of Co-Determined Firms. IZA Discussion Paper No. 7022, Available at SSRN: https://ssrn.com/abstract=2186800

Rafael Gralla (Contact Author)

Technical University of Dortmund ( email )

Emil-Figge-Stra├če 50
Dortmund, 44227
Germany

Kornelius Kraft

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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