Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236698 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9156
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We provide a comprehensive overview of codetermination, i.e., worker representation in firms’ governance and management. We cover the institution’s history, implementation, and the best available evidence on its economic impacts. We argue that existing quasi-experimental estimates suggest that codetermination has zero or very small positive effects on worker and firm outcomes at the partial-equilibrium firm level. In addition, we test for general-equilibrium effects of codetermination laws using novel cross-country event studies exploiting a series of codetermination reforms between the 1960s and 2010s, and find no evidence that codetermination laws shift aggregate economic outcomes or the quality of industrial relations. We offer three potential explanations of the institution’s limited impact. First, existing codetermination laws convey relatively little authority to workers. Second, countries with codetermination laws have high baseline levels of informal worker involvement in decision-making, independently of formal codetermination. Third, codetermination laws may interact with other labor market institutions, such as union representation and collective bargaining. We close by discussing implications of these facts for recent codetermination proposals in the United States.
Subjects: 
codetermination
unions
worker representation
wages
GDP
JEL: 
J08
K31
M10
M50
Document Type: 
Working Paper
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