"What do works councils do for employees?" Von der Fakultät für Wirtschaftswissenschaften der Rheinisch-Westfälischen Technischen Hochschule Aachen zur Erlangung des akademischen Grades eines Doktors der Wirtschafts- und Sozialwissenschaften genehmigte Dissertation vorgelegt von Diplom-Kaufmann Andreas Helmut Schmitt Berichter: Univ.-Prof. Dr.rer.pol. Christian Grund Univ.-Prof. Dr.rer.pol. Christine Harbring Tag der mündlichen Prüfung: 11.12.2012 Diese Dissertation ist auf den Internetseiten der Hochschulbibliothek online verfügbar. List of Publications Grund, C. and Schmitt, A. (2013) Works Councils, Wages, and Job Satisfaction, in Applied Economics 45 No. 3, 299-310. Table of Contents Table of Contents ........................................................................................................................ I Index of Tables ......................................................................................................................... IV Index of Figures ....................................................................................................................... VI Acknowledgement ................................................................................................................... VII 1 Introduction .................................................................................................................... 1 1.1 German works councils and the institutional background ...................................... 1 1.2 General theories concerning works councils ........................................................... 4 1.3 The works council’s debate ..................................................................................... 6 1.4 Main topics of this dissertation ............................................................................... 8 1.4.1 Works councils and working time arrangements ........................................... 8 1.4.2 Works councils, wages and job satisfaction .................................................. 9 1.4.3 Works councils, employment separations and severance payments ............ 10 2 Works councils and working time arrangements ......................................................... 12 2.1 Introduction ........................................................................................................... 12 2.2 Literature review and shortcomings ...................................................................... 13 2.3 Institutional background, theoretical considerations and hypotheses ................... 17 2.3.1 Institutional background .............................................................................. 17 2.3.2 Theoretical considerations and hypotheses .................................................. 19 2.4 Data, variables and statistical procedure ............................................................... 27 2.4.1 Data and variables ........................................................................................ 27 2.4.2 Statistical procedure ..................................................................................... 30 2.5 Empirical results .................................................................................................... 31 2.5.1 Works councils and overtime work ............................................................. 31 2.5.2 Works councils and the number of overtime hours ..................................... 36 I 2.5.3 Works councils and different types of overtime work ................................. 40 2.5.4 Works councils and individual working time accounts ............................... 44 2.5.5 Works councils and the balancing period of working time accounts .......... 48 2.6 Sample selection issues and unobserved heterogeneity ........................................ 50 2.7 Implications and Limitations ................................................................................. 53 2.8 Conclusion ............................................................................................................. 57 3 Works councils, wages and job satisfaction ................................................................. 61 3.1 Introduction ........................................................................................................... 61 3.2 Literature review and shortcomings ...................................................................... 62 3.3 Theoretical considerations and hypotheses ........................................................... 64 3.4 Data, variables and statistical procedure ............................................................... 67 3.4.1 Data and variables ........................................................................................ 67 3.4.2 Statistical procedure ..................................................................................... 69 3.5 Empirical results .................................................................................................... 70 3.5.1 Works councils and wages ........................................................................... 70 3.5.2 Works councils and job satisfaction ............................................................ 78 3.6 Discussion ............................................................................................................. 85 3.7 Conclusion ............................................................................................................. 87 4 Works councils, employment separations and severance payments ............................ 88 4.1 Introduction ........................................................................................................... 88 4.2 Literature review and shortcomings ...................................................................... 89 4.3 Institutional background, theoretical considerations and hypotheses ................... 93 4.3.1 Institutional background .............................................................................. 93 4.3.2 Theoretical considerations and hypotheses .................................................. 96 4.4 Data, variables and statistical procedure ............................................................. 100 II 4.4.1 Data and variables ...................................................................................... 100 4.4.2 Statistical procedure ................................................................................... 103 4.5 Empirical results .................................................................................................. 104 4.5.1 Works councils, dismissals and voluntary quits ........................................ 104 4.5.2 Works councils and severance payments for dismissed employees .......... 111 4.6 Discussion and Implications ................................................................................ 119 4.7 Conclusion ........................................................................................................... 122 5 Conclusive remarks .................................................................................................... 124 5.1 Summary ............................................................................................................. 124 5.2 Limitations and extensions .................................................................................. 129 References .............................................................................................................................. 132 Erklärung ................................................................................................................................ 143 III Index of Tables Table 2.1: Descriptive statistics ........................................................................................... 29 Table 2.2: Mean comparison - overtime work ..................................................................... 32 Table 2.3: Overtime work regressions ................................................................................. 34 Table 2.4: Mean comparison - overtime hours .................................................................... 37 Table 2.5: Overtime hours regressions ................................................................................. 39 Table 2.6: Mean comparison - compensation of overtime work .......................................... 41 Table 2.7: Compensation for overtime work regressions .................................................... 43 Table 2.8: Mean comparison – working time accounts ....................................................... 45 Table 2.9: Working time accounts regressions .................................................................... 47 Table 2.10: Balancing period of working time accounts regressions .................................. 49 Table 2.11: Difference-in-differences regressions ............................................................... 53 Table A: Actual working time regressions ........................................................................... 60 Table 3.1: Descriptive statistics ........................................................................................... 68 Table 3.2: Mean comparison - wages ................................................................................... 71 Table 3.3: Wage regressions ................................................................................................ 73 Table 3.4: Average wages and changes in wages from 2001 to 2006 ................................. 74 Table 3.5: Difference-in-differences