October 2017

IZA DP No. 11066: Nonunion Employee Representation: Theory and the German Experience with Mandated Works Councils

published in: Annals of Public and Cooperative Economics, 2018, 89 (1), 201-234

Theories of how nonunion employee representation impacts firm performance, affects market equilibria, and generates externalities on labor and society are synthesized. Mandated works councils in Germany provide a particularly strong form of nonunion employee representation. A systematic review of research on the German experience with mandated works councils finds generally positive effects, though these effects depend on a series of moderating factors and some impacts remain ambiguous. Finally, key questions for empirical research on nonunion employee representation, which have previously been little analyzed in the literature, are reviewed.