Voluntary Quits: Do Works Councils Matter? An Analysis of the Reform of the German Works Constitution Act 2001

Most of the literature on the effects of German works councils does not deal with the issue of potential endogeneity of works council existence. Exploiting exogenous variation in works council authority stemming from a 2001 reform of the German Works Constitution Act, I apply a regression difference-in-difference using establishment panel data. I find that increasing works council size and the introduction of one full-time councilor causally reduces the number of voluntary quits by about 30 %. This decline is driven entirely by collective voice effects and there is no evidence for monopoly effects in place. Similar to the findings of previous research, the effect is significant only in establishments which are subject to a collective agreement. The results suggest that the effectiveness of works councils either heavily relies on the support of unions, or that works councils mainly serve as a guardian of collective agreements.

Der Beschäftigungsbeitrag kleiner und mittlerer Unternehmen nach der EU-Definition / The Employment Contribution of Small and Medium-sized Enterprises According to the EU-definition

SummaryStatements emphasizing the major contribution of the small and medium sized enterprises (SMEs) for net job creation are quite frequent. Concerning the current definition of SMEs provided by the European Commission (EC), this paper makes a first attempt to approximate SMEs’ contribution to net employment change based on the IAB-Establishment Panel Data over the years 1998 to 2005 for the whole private economy. Due to sufficient data, independent one-plant firms with less than 250 employees may approximate the group of SMEs according at best. Comparisons with the firm-level Amadeus database validate the suitability of the IAB-establishment panel data for calculation of the SMEs’ employment share, as long as one controls for the establishments’ independence status. The employment share lies about fifty percent. As a matter of fact, the employment share of affiliated SMEs increases over time. Furthermore, independent small plants do not show higher net employment change rates than neither affiliated plants nor middle-sized and large plants. The results reinforce once again the impression that empirical evidence for the assumed superiority of SMEs, is very weak. Further research should mention the role of ownership and firms venturing on the level of firm as well as for the economy at all in more detail.

The Impact of ICT Investment on Establishment Productivity

This paper finds substantial effects of ICT investments on productivity for a large and representative German establishment panel data set. In contrast to the bulk of the literature also establishments without ICT capital are included and lagged effects of ICT investments are analysed. In addition, a broad range of establishment and employee characteristics are taken account of in order to avoid omitted variable bias. It is shown that taking into account unobserved heterogeneity of the establishments and endogeneity of ICT investments increases the estimated lagged productivity impact of ICT investments.