Worker Participation in Decision-making, Worker Sorting, and Firm Performance
Steffen Müller, Georg Neuschäffer
Industrial Relations,
Nr. 4,
2021
Abstract
Worker participation in decision-making is often associated with high-wage and high-productivity firm strategies. Using linked employer–employee data for Germany and worker fixed effects from a two-way fixed-effects model of wages capturing observed and unobserved worker quality, we find that plants with formal worker participation via works councils indeed employ higher quality workers. We show that worker quality is already higher in plants before council introduction and further increases after the introduction. Importantly, we corroborate previous studies by showing positive productivity and profitability effects even after taking into account worker sorting.
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Why Is there Resistance to Works Councils In Germany? An Economic Perspective
Steffen Müller, Jens Stegmaier
Economic and Industrial Democracy,
Nr. 3,
2020
Abstract
Recent empirical research generally finds evidence of positive economic effects for works councils, for example with regard to productivity and – with some limitations – to profits. This makes it necessary to explain why employers’ associations have reservations about works councils. On the basis of an in-depth literature analysis, this article shows that beyond the generally positive findings, there are important heterogeneities in the impact of works councils. The authors argue that those groups of employers that tend to benefit little from employee participation in terms of productivity and profits may well be important enough to shape the agenda of their employers’ organization and have even gained in importance within their organizations in recent years. The authors also discuss the role of deviations from profit-maximizing behavior like risk aversion, short-term profit-maximization and other non-pecuniary motives, as possible reasons for employer resistance.
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Worker Participation in Decision-making, Worker Sorting, and Firm Performance
Steffen Müller, Georg Neuschäffer
Abstract
Worker participation in decision-making is often associated with high-wage and high-productivity firm strategies. Using linked-employer-employee data for Germany and worker fixed effects from a two-way fixed effects model of wages capturing observed and unobserved worker quality, we find that establishments with formal worker participation via works councils indeed employ higher-quality workers. We show that worker quality is already higher in plants before council introduction and further increases after the introduction. Importantly, we corroborate previous studies by showing positive productivity and profitability effects even after taking into account worker sorting.
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Credit Allocation when Borrowers are Economically Linked: An Empirical Analysis of Bank Loans to Corporate Customers
Iftekhar Hasan, Kristina Minnick, Kartik Raman
Journal of Corporate Finance,
June
2020
Abstract
Using detailed loan level data, we examine bank lending to corporate customers relying on principal suppliers. Customers experience larger loan spreads, higher intensity of covenants and greater likelihood of requiring collateral when they depend more on the principal supplier for inputs. The positive association between the customer’s loan spread and its dependence on the principal supplier is less pronounced when the bank has a prior loan outstanding with the principal supplier, and when the bank has higher market share in the industry. Longer relationships between the customer and its principal supplier, and between the bank and the principal supplier, mitigate lending constraints. The evidence is consistent with corporate suppliers serving as an informational bridge between the lender and the customer.
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Does Working at a Start-Up Pay Off?
Daniel Fackler, Lisa Hölscher, Claus Schnabel, Antje Weyh
Abstract
Using representative linked employer-employee data for Germany, this paper analyzes short- and long-run differences in labor market performance of workers joining startups instead of incumbent firms. Applying entropy balancing and following individuals over ten years, we find huge and long-lasting drawbacks from entering a start-up in terms of wages, yearly income, and (un)employment. These disadvantages hold for all groups of workers and types of start-ups analyzed. Although our analysis of different subsequent career paths highlights important heterogeneities, it does not reveal any strategy through which workers joining start-ups can catch up with the income of similar workers entering incumbent firms.
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Do Start-ups Provide Employment Opportunities for Disadvantaged Workers?
Daniel Fackler, Michaela Fuchs, Lisa Hölscher, Claus Schnabel
ILR Review,
Nr. 5,
2019
Abstract
This article compares the hiring patterns of start-ups and incumbent firms to analyze whether start-ups offer relatively more job opportunities to disadvantaged workers. Using administrative linked employer–employee data for Germany that provide the complete employment biographies of newly hired workers, the authors show that young firms are more likely than incumbents to hire applicants who are older, foreign, or unemployed, or who have unstable employment histories, arrive from outside the labor force, or were affected by a plant closure. Analysis of entry wages shows that penalties for these disadvantaged workers, however, are higher in start-ups than in incumbent firms. Therefore, even if start-ups provide employment opportunities for certain groups of disadvantaged workers, the quality of these jobs in terms of initial remuneration appears to be low.
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Does Extended Unemployment Benefit Duration Ameliorate the Negative Employment Effects of Job Loss?
Daniel Fackler, Jens Stegmaier, Eva Weigt
Labour Economics,
2019
Abstract
We study the effect of job displacement due to bankruptcies on earnings and employment prospects of displaced workers and analyse whether extended potential unemployment benefit duration (PBD) ameliorates the negative consequences of job loss. Using German administrative linked employer-employee data, we find that job loss has long-lasting negative effects on earnings and employment. Displaced workers also more often end up in irregular employment relationships (part-time, marginal part-time employment, and temporary agency work) than their non-displaced counterparts. Applying a regression discontinuity approach that exploits a three months PBD extension at the age threshold of 50 we find hardly any effects of longer PBD on labour market outcomes of displaced workers.
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Do Startups Provide Employment Opportunities for Disadvantaged Workers?
Daniel Fackler, Michaela Fuchs, Lisa Hölscher, Claus Schnabel
IZA Discussion Paper Series,
im Erscheinen
Abstract
This paper analyzes whether startups offer job opportunities to workers potentially facing labor market problems. It compares the hiring patterns of startups and incumbents in the period 2003 to 2014 using administrative linked employer-employee data for Germany that allow to take the complete employment biographies of newly hired workers into account. The results indicate that young plants are more likely than incumbents to hire older and foreign applicants as well as workers who have instable employment biographies, come from unemployment or outside the labor force, or were affected by a plant closure. However, an analysis of entry wages reveals that disadvantageous worker characteristics come along with higher wage penalties in startups than in incumbents. Therefore, even if startups provide employment opportunities for certain groups of disadvantaged workers, the quality of these jobs in terms of initial remuneration seems to be low.
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Why is there Resistance to Works Councils in Germany? An Economic Perspective
Steffen Müller, Jens Stegmaier
Abstract
Recent empirical research generally finds evidence of positive economic effects of works councils, for example with regard to productivity and – with some limitations – to profits. This makes it necessary to explain why employers’ associations have reservations against works councils. On the basis of an in-depth literature analysis, we show that beyond the generally positive findings, there are important heterogeneities in the impact of works councils. We argue that those groups of employers that tend to benefit little from employee participation in terms of productivity and profits may well be important enough to shape the agenda of their employers’ organisation and even gained in importance within their organisations in recent years. We also discuss the role of deviations from profit-maximising behaviour like risk aversion, short-term profit maximisation, and other non-pecuniary motives, as possible reasons for employer resistance.
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Taking the Leap: The Determinants of Entrepreneurs Hiring Their First Employee
Robert W. Fairlie, Javier Miranda
Journal of Economics and Management Strategy,
Nr. 1,
2017
Abstract
Job creation is one of the most important aspects of entrepreneurship, but we know relatively little about the hiring patterns and decisions of start‐ups. Longitudinal data from the Integrated Longitudinal Business Database (iLBD), Kauffman Firm Survey (KFS), and the Growing America through Entrepreneurship (GATE) experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a nonemployer to employer firm among start‐ups. Several interesting patterns emerge regarding the dynamics of nonemployer start‐ups hiring their first employee. Hiring rates among the universe of nonemployer start‐ups are very low, but increase when the population of nonemployers is focused on more growth‐oriented businesses such as incorporated and employer identification number businesses. If nonemployer start‐ups hire, the bulk of hiring occurs in the first few years of existence. After this point in time, relatively few nonemployer start‐ups hire an employee. Focusing on more growth‐ and employment‐oriented start‐ups in the KFS, we find that Asian‐owned and Hispanic‐owned start‐ups have higher rates of hiring their first employee than white‐owned start‐ups. Female‐owned start‐ups are roughly 10 percentage points less likely to hire their first employee by the first, second, and seventh years after start‐up. The education level of the owner, however, is not found to be associated with the probability of hiring an employee. Among business characteristics, we find evidence that business assets and intellectual property are associated with hiring the first employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, we do not find evidence that entrepreneurship training increases the likelihood that nonemployers hire their first employee.
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