Labor in the boardroom

Abstract

"We estimate the effects of a mandate allocating a third of corporate board seats to workers (shared governance). We study a reform in Germany that abruptly abolished this mandate for new firm cohorts but locked it in for incumbents. Rejecting the canonical hold-up prediction - that increasing labor's power reduces owners' investment incentives - we find positive effects on capital formation. Shared governance does not measurably raise wages or rent sharing, nor does it lower profitability or debt capacity. It lowers outsourcing. The evidence is consistent with richer models of industrial relations whereby shared governance institutionalizes communication and repeated interactions between labor and capital." (Author's abstract, IAB-Doku) ((en))

Cite article

Jäger, S., Schoefer, B. & Heining, J. (2020): Labor in the boardroom. (IAB-Discussion Paper 08/2020), Nürnberg, 114 p.