Do Employees Benefit from Worker Representation on Corporate Boards?

40 Pages Posted: 17 Dec 2020

See all articles by Christine Blandhol

Christine Blandhol

Princeton University

Magne Mogstad

University of Chicago

Peter Nilsson

Stockholm University - Institute for International Economic Studies (IIES)

Ola L. Vestad

Statistics Norway

Multiple version iconThere are 3 versions of this paper

Date Written: December 17, 2020

Abstract

Do employees benefit from worker representation on corporate boards? Economists and policymakers are keenly interested in this question – especially lately, as worker representation is widely promoted as an important way to ensure the interests and views of the workers. To investigate this question, we apply a variety of research designs to administrative data from Norway. We find that a worker is paid more and faces less earnings risk if she gets a job in a firm with worker representation on the corporate board. However, these gains in wages and declines in earnings risk are not caused by worker representation per se. Instead, the wage premium and reduced earnings risk reflect that firms with worker representation are likely to be larger and unionized, and that larger and unionized firms tend to both pay a premium and provide better insurance to workers against fluctuations in firm performance. Conditional on the firm’s size and unionization rate, worker representation has little if any effect. Taken together, these findings suggest that while workers may indeed benefit from being employed in firms with worker representation, they would not benefit from legislation mandating worker representation on corporate boards.

Keywords: Worker compensation; Worker representation; Corporate governance; Unions

JEL Classification: G34, G38, J31, J54, J58

Suggested Citation

Blandhol, Christine and Mogstad, Magne and Nilsson, Peter and Vestad, Ola L., Do Employees Benefit from Worker Representation on Corporate Boards? (December 17, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-183, Available at SSRN: https://ssrn.com/abstract=3750960 or http://dx.doi.org/10.2139/ssrn.3750960

Christine Blandhol (Contact Author)

Princeton University ( email )

Magne Mogstad

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Peter Nilsson

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Ola L. Vestad

Statistics Norway ( email )

N-0033 Oslo
Norway

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