German Works Councils and Productivity: First Evidence from a Nonparametric Test

11 Pages Posted: 15 Oct 2005

See all articles by Joachim Wagner

Joachim Wagner

University of Lueneburg - Institute of Economics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; IZA Institute of Labor Economics

Date Written: September 2005

Abstract

This paper presents the first nonparametric test whether German works councils go hand in hand with higher labor productivity or not. It distinguishes between establishments that are covered by collective bargaining or not. Results from a Kolmogorov-Smirnov test for first order stochastic dominance tend to indicate that pro-productive effects are found in firms with collective bargaining only. However, the significance level of the test statistic is higher than a usually applied critical level. This somewhat weak evidence casts doubts on the validity of results from recent parametric approaches using a regression framework that point to high positive effects of works councils on productivity.

Keywords: works councils, productivity, stochastic dominance

JEL Classification: J50

Suggested Citation

Wagner, Joachim, German Works Councils and Productivity: First Evidence from a Nonparametric Test (September 2005). IZA Discussion Paper No. 1757, Available at SSRN: https://ssrn.com/abstract=822806

Joachim Wagner (Contact Author)

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