Higher Wages, Overstaffing or Both? The Employer's Assessment of Problems Regarding Wage Costs and Staff Level in Co-Determined Establishments

32 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 the differences in the likelihood of overpayment and overemployment in establishments with and without works councils. In contrast to other studies, we use assessments by the management concerning the existence of such problems. Furthermore, we also analyze how different types of works councils influence the probability of overemployment and overpayment. Using the wave 2006 of the IAB Establishment Panel, we show that establishments with works councils that are prepared to interfere with the management are more likely to suffer from overemployment but do not differ in the likelihood of overpayment compared to establishments without works councils. Establishments with works councils that are in line with the management, however, do not differ from establishments without a works council with regard to the likelihood of overemployment but have a lower likelihood of overpayment.

Keywords: works councils, wages, employment

JEL Classification: J23, J31, J53

Suggested Citation

Gralla, Rafael and Kraft, Kornelius, Higher Wages, Overstaffing or Both? The Employer's Assessment of Problems Regarding Wage Costs and Staff Level in Co-Determined Establishments. IZA Discussion Paper No. 7021, Available at SSRN: https://ssrn.com/abstract=2186799

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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