TY  - JOUR
AU  - Freeman,Richard B.
AU  - Lazear,Edward P.
TI  - An Economic Analysis of Works Councils
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4918
PY  - 1994
Y2  - November 1994
UR  - http://www.nber.org/papers/w4918
L1  - http://www.nber.org/papers/w4918.pdf
N1  - Author contact info:
Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA  02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org

Edward P. Lazear
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/723-9136
Fax: 650/723-0498
E-Mail: lazear@stanford.edu
M1  - published as Richard B. Freeman, Edward P. Lazear. "An Economic Analysis of Works Councils," in Joel Rogers and Wolfgang Streeck, "Works Councils: Consultation, Representation, and Cooperation in Industrial Relations" University of Chicago Press (1995)

AB  - Works councils, found in most Western European economies, are elected bodies of employees with rights to information, consultation, and in some cases co-determination of employment conditions at local workplaces, mandated by law.  Many European employers and unions believe that councils improve communication between workers and management, raising social output, while reducing the speed with which decisions are made.  This paper analyzes the operation of councils as a means of improving social output by creating more cooperative labor relations.  It argues that councils are mandated because the incentive for companies to institute them and delegate them power falls short of the social incentive; that workers provide more accurate information to employers about preferences when councils have some say over how that information is used; and that the communication from employers to workers produces socially desirable worker concessions in bad times that would not occur absent this institution.  It compares a jury style random selection of works councilors with selection via elections.
ER  -