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Labor in the Boardroom*
Name
Labor_in_the_Boardroom_QJE.pdf
Description
Accepted version
Size
3.34 MB
Format
Adobe PDF
Checksum (MD5)
fe469b5c27fa1b21bc62066a1d63eeb9
Author(s)
Jäger, Simon
Schoefer, Benjamin
Heining, Jörg
Date Issued
2021
Journal
Quarterly Journal of Economics
Publisher
Oxford University Press (OUP)
Version
Author's final manuscript
Abstract
Abstract
We estimate the wage effects of shared governance, or codetermination, in the form of a mandate of one-third of corporate board seats going to worker representatives. We study a reform in Germany that abruptly abolished this mandate for stock corporations incorporated after August 1994, while it locked the mandate for the slightly older cohorts. Our research design compares firm cohorts incorporated before the reform and after; in a robustness check we draw on the analogous difference in unaffected firm types (LLCs). We find no effects of board-level codetermination on wages and the wage structure, even in firms with particularly flexible wages. The degree of rent sharing and the labor share are also unaffected. We reject that disinvestment could have offset wage effects through the canonical hold-up channel, as shared governance, if anything, increases capital formation.
We estimate the wage effects of shared governance, or codetermination, in the form of a mandate of one-third of corporate board seats going to worker representatives. We study a reform in Germany that abruptly abolished this mandate for stock corporations incorporated after August 1994, while it locked the mandate for the slightly older cohorts. Our research design compares firm cohorts incorporated before the reform and after; in a robustness check we draw on the analogous difference in unaffected firm types (LLCs). We find no effects of board-level codetermination on wages and the wage structure, even in firms with particularly flexible wages. The degree of rent sharing and the labor share are also unaffected. We reject that disinvestment could have offset wage effects through the canonical hold-up channel, as shared governance, if anything, increases capital formation.
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
10.1093/QJE/QJAA038
