The effect of employee participation in asset formation on productivity : the influence of unobserved heterogeneity

Abstract

"Employee participation in the capital or profit of the firm is regarded as a suitable way to increase labour productivity if the employees' performance can not be monitored directly. Nonetheless employee participation in asset formation is currently used by few German firms. In this paper we show that the direct effect on productivity of employee participation in asset formation is only small and is furthermore statistically insignificant. The study was conducted using the representative data of the 1999 and 2000 waves of the IAB establishment panel. This result contradicts previous studies, some of which have derived impressive positive productivity effects. The methodological innovation in this study is the consideration of unobserved heterogeneity between firms that use employee participation in asset formation and firms that do not. It emerges here that firms which offer employee participation are more productive on average as a result of unobserved factors. Thus the cause for their higher productivity can not be attributed to the existence of employee participation. In addition it is shown that the production functions of firms with and without employee participation differ greatly from each other." (Author's abstract, IAB-Doku) ((en))

Cite article

Wolf, E. & Zwick, T. (2002): Produktivitätswirkung von Mitarbeiterbeteiligung. Der Einfluss von unbeobachteter Heterogenität. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 35, No. 1, p. 123-132.