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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 02 de 2009


Worker Directors: A German Product that Didn’t Export?

John T. Addison
Queen’s University Management School and IZA

Claus Schnabel
Lehrstuhl für Arbeitsmarkt- und Regionalpolitik, Friedrich-Alexander-Universität Erlangen-Nürnberg and IZA

Despite its seeming lack of attractiveness to other countries, the German system of quasi-parity codetermination at company level has thus far held up fairly well. We recount the theoretical arguments for and against this form of codetermination, and survey the evolving empirical evidence as to its economic impact. Even if theory and the more recent empirical findings hold out the prospect that the apparatus of good corporate governance might include employee representation on company boards, caveats attach to the extent of representation and the composition of the worker side. But even if the entity has performed better than its external reputation might indicate, it is clearly in the process of adapting to change. In particular, the availability of alternative forms of corporate governance will increasingly shape the German institution.

JEL Classification: J50.

Keywords: codetermination, board-level employee representation, firm performance, Germany.

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