published in: British Journal of Industrial Relations, 2004, 42 (2), 255-281
In a survey published in the British Journal of Industrial Relations, Frege (2002) evaluates
research on the German works council from the perspective of several disciplines, including
economics. Ultimately, she concludes that economic analysis of the works council has
reached a ‘dead end’. The present treatment offers a very different conclusion based on a
more encompassing review of the evidence. It will identify three distinct phases in the
economic analysis of codetermination at the workplace. This framework is key to
understanding the progress that has been made in analysing the effect of works councils on
firm performance, while highlighting some important measurement issues and diversity of
finding. Given the recent vintage of much of the German research, it is inevitable that Frege
considers studies from just the first two phases. Rather interestingly, it is the neglected third
phase of research that contains some of the most favourable evaluations to date of works
council impact.
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