Chair of Econometrics

Speaker:
Simon Trenkle (IZA - Institute of Labor Economics)

Worker Representatives

^{(with Julian Budde, Thomas Dohmen, Simon Jäger)}

Abstract: We study the selection of worker representatives, and their effect on worker outcomes. We focus on German works councilors – shop-floor representatives elected from the workforce. We paint a comprehensive picture of representatives’ characteristics spanning a period of more than forty years, combining rich administrative panel and representative survey data. Becoming a professional worker representative leads to substantial wage gains and increased employment security. Consistent with desirability of the role, worker representatives are positively selected in terms of earnings and person-fixed effects. They tend to have vocational training and are less likely to be untrained or have a university-level education. Representatives  show greater interest in politics and tend to lean left politically compared to the populations they represent.  Contrary to other domains of power where blue-collar workers are often underrepresented, we document that blue-collar workers have been close to proportionally represented among works councilors for the past four decades.  Drawing on a retirement IV strategy and event study designs around works council elections, we find that electing blue-collar representatives reduces involuntary layoffs. Our results support the hypothesis that blue-collar representatives place greater emphasis on job security, in line with stronger worries about layoffs and risk of unemployment faced by blue-collar workers.

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