Higher wages, overstaffing or both?
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Date
2012-05-10
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Abstract
This study examines the differences in the likelihood of overpayment and
overemployment in establishments with and without works councils. In contrast to
other studies, we use assessments by the management concerning the existence of
such problems. Furthermore, we also analyze how different types of works councils
influence the probability of overemployment and overpayment. Using the wave 2006
of the IAB Establishment Panel, we show that establishments with works councils
that are prepared to interfere with the management are more likely to suffer from
overemployment but do not differ in the likelihood of overpayment compared to
establishments without works councils. Establishments with works councils that are in
line with the management, however, do not differ from establishments without a
works council with regard to the likelihood of overemployment but have a lower
likelihood of overpayment.
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Keywords
employment, wages, works councils