Workers in the board room: The causal effects of shared governance

Grant description:

Whether and how to involve workers in decision-making at the workplace is a fundamental question of the organization of firms and economies more broadly. This project proposes to use a novel research design to study a 1994 reform in Germany that sharply abolished employee board representation in newly incorporated firms with fewer than 500 workers in order to analyze the effects of shared governance on a variety of firm and worker-level outcomes, including wages, distribution of profits, and inequality of pay within a firm. The authors will use a regression discontinuity design that exploits the 1994 reform, supplemented with a difference-in-difference approach that compares changes among shareholder firms to changes among nonshareholder firms that were never subject to co-determination and thus were not affected by the reform. This will allow them to control for general economic trends that may have impacted firm and worker outcomes around the timing of the reform.