Worker RepresentativesThomas Dohmen

15. Juni 2023

Thomas Dohmen (Universität Bonn) presents his project "Worker Representatives" in the Microeconomics Research Seminar at VMP 5, room 0079  17:15-18:45. 

Abstract: 

We study the selection of worker representatives and how representation affects worker outcomes. We focus on the case of powerful German works councils. These shop-floor representatives are elected from the workforce and have broad authorities. We paint a comprehensive picture of representatives’ characteristics spanning a period of more than forty years, combining rich administrative panel and representative survey data. Contrary to other domains of power where blue-collar workers are often underrepresented, we document that blue-collar workers have been proportionally represented among works councilors for the past four decades. Although in the 1970s and 1980s, men with vocational training were highly overrepresented among councilors, we observe a secular convergence over time, resulting in almost proportional representation along these dimensions today. Our findings reject theories of adverse selection and instead indicate that worker representatives are positively selected in terms of their earnings and person-fixed effects. They tend to have more extroverted, more open, and less neurotic personalities, and show greater interest in politics while leaning left politically, compared to the populations they represent. Drawing on event study designs around scheduled works council elections, as well as an instrumental variables strategy building on representatives retiring, we study the effects of blue-collar representation on worker outcomes. We find that electing blue-collar representatives protects workers from involuntary layoffs and leads to small increases in wages and apprenticeship training. Our results align with the idea that blue-collar representatives place greater emphasis on job security, in line with higher worries about layoffs and risk of unemployment faced by blue-collar workers