IZA DP No. 1442: Co-Determination, Efficiency, and Productivity
published in: British Journal of Industrial Relations, 2005, 43 (2), 233-248
We present the first panel estimates of the productivity effects of the unique German institution of parity, board-level co-determination. Although our data span two severe recessions when labour hoarding costs of co-determination are probably highest, and the panel is too short to capture the likely long run benefits in terms of human capital formation and job satisfaction, we find positive productivity effects of the 1976 extension to parity co-determination in large firms.