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Rent Seeking at Plant Level: An Application of the Card-de la Rica Tenure Model...
Addison, John T.; Teixeira, Paulino; Zwick, ThomasLow-skilled workers enjoy a large wage advantage in German works council establishments. Since job tenure is also longer for these workers, one explanation might be rent-seeking. If the premium is a compensating wage differential (or a return to unmeasured ability), it should not lead to higher tenure; whereas if it is (partly) rent, lower quits should lead to longer tenure at plants with works councils. Our an...
The Impact of Works Councils on Wages
Addison, John T.; Teixeira, Paulino; Zwick, ThomasThis paper investigates for the first time the effect of works councils on the anatomy of wages, using matched employer-employee data from the German LIAB for 2001. We find that works councils are associated with higher earnings. The wage premium is roughly comparable with the combined effect of sectoral and plant collective bargaining proper. This result persists after taking account of worker and establishmen...
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