Labor in the Boardroom
We estimate the wage effects of shared governance, or codetermination, in the form of a mandate of one third of corporate board seats going to worker representatives. We study a reformin Germany that abruptly abolished this mandate for stock corporations incorporated after August 1994, while it locked the mandate for the slightly older cohorts. Our research design compares firm cohorts incorporated before the reform and after; in a robustness check we additionally draw on the analogous difference in unaffected firm types (LLCs). We find no effects of board-level codetermination on wages and the wage structure, even in firms with particularly flexible wages. The degree of rent sharing and the labor share are also unaffected. We reject that disinvestment could have offset wage effects through the canonical hold-up channel, as shared governance, if anything, increases capital formation.
Non-Technical Summaries
- German firms with shared governance had 40 to 50 percent larger long-term capital stocks than firms without workers on the board,...
Published Versions
Simon Jäger & Benjamin Schoefer & Jörg Heining, 2021. "Labor in the Boardroom*," The Quarterly Journal of Economics, vol 136(2), pages 669-725. citation courtesy of 
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