Foreign Ownership and Firm Survival: First evidence for enterprises in Germany

This paper documents the relationship between foreign ownership and firm survival for enterprises in Germany using unique tailor-made new representative data that merge information from surveys performed by the Statistical Offices, from administrative data collected by the Tax Authorities and from a commercial data provider. It contributes to the literature by providing the first evidence on the role of foreign ownership for firm survival in Germany, one of the most important destination countries for foreign direct investments. Our micro-econometric analysis reveals a ceteris paribus higher risk of exit for foreign owned firms in West Germany but not in East Germany.Foreign ownership, firm survival, Germany

Foreign Ownership and Firm Survival: First Evidence for Enterprises in Germany

This paper documents the relationship between foreign ownership and firm survival for enterprises in Germany using unique tailor-made new representative data that merge information from surveys performed by the Statistical Offices, from administrative data collected by the Tax Authorities and from a commercial data provider. It contributes to the literature by providing the first evidence on the role of foreign ownership for firm survival in Germany, one of the most important destination countries for foreign direct investments. Our micro-econometric analysis reveals a ceteris paribus higher risk of exit for foreign owned firms in West Germany but not in East Germany.foreign ownership, firm survival, Germany

The course of research into the economic consequences of German works councils

In a recent survey, Frege (2002) concludes that economic analysis of the works council has reached a `dead end´. The present treatment offers a 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. While Frege just considered studies from the first two phases, it is the third phase of research that contains some of the most positive evaluations to date of works council impact. Even if such estimates appear much exaggerated and the effect of works councils is likely to be small on average, the new literature redirects our research effort towards the factors that produce swings around this average, including differences in works council types and their workplace environments. -- In einem jüngst veröffentlichten Überblicksartikel kommt Frege (2002) zu dem Schluss, die ökonomische Analyse des Betriebsrats sei in eine Sackgasse geraten. Die vorliegende Arbeit zieht ein anderes Fazit, das auf einer umfassenderen Betrachtung der empirischen Evidenz beruht. Dabei werden drei Phasen der ökonomischen Analyse der betrieblichen Mitbestimmung unterschieden. Während Frege nur Studien aus den ersten beiden Phasen berücksichtigte, ist es gerade die dritte Forschungsphase, die einige der positivsten Bewertungen von Betriebsräten enthält. Selbst wenn derartige Einschätzungen stark übertrieben erscheinen und der Betriebsratseffekt im Durchschnitt relativ gering sein dürfte, weist die neuere Literatur darauf hin, dass unsere Forschungsbemühungen sich stärker auf Faktoren konzentrieren sollten, die Schwankungen um diesen Durchschnitt hervorrufen (wie z.B. unterschiedliche Typen von Betriebsräten und deren Arbeitsplatzumgebung).Works council,codetermination,Germany

The (Parlous) State of German Unions

This paper traces the profound decline in German unionism over the course of the last three decades. Today just one in five workers is a union member, and it is now moot whether this degree of penetration is consistent with a corporatist model built on encompassing unions. The decline in union membership and density is attributable to external forces that have confronted unions in many countries (such as globalization and compositional changes in the workforce) and to some specifically German considerations (such as the transition process in postcommunist Eastern Germany) and sustained intervals of classic insider behavior on the part of German unions. The ‘correctives’ have included mergers between unions, decentralization, and wages that are more responsive to unemployment. At issue is the success of these innovations. For instance, the trend toward decentralization in collective bargaining hinges in part on the health of that other pillar of the dual system of industrial relations, the works council. But works council coverage has also declined, leading some observers to equate decentralization with deregulation. While this conclusion is likely too radical, German unions are at the cross roads. It is argued here that if they fail to define what they stand for, are unable to increase their presence at the workplace, and continue to lack convincing strategies to deal with contemporary economic and political trends working against them, then their decline may become a rout.

Sensitivity of middle Miocene climate and regional monsoon to palaeo-altimetry

It is well-known that plate motions and the elevation of mountains belts have played a major role in palaeoclimate evolution. The present day monsoon in southeast Asia and northern Australia is associated with the Tibetan plateau. We investigate how the Miocene Climate Optimum (MCO) developed in response to altimetry changes in Eurasia and South America impacting changes in regional monsoon, wind stress and precipitation. We carried out a number of numerical experiments with alternative paleo-altimetries, using an updated NCAR coupled climate model, CCSM3, and CAM3.1 and CLM3 with slab ocean and ice models, validated with proxies. Our model results explore the sensitivities of regional climate change to plate motions and rising mountain belts as well as sea-level change. Especially, the model simulations ground-truth the monsoon evolution in the southeast Asia, northern Australia and South America

German works councils in the production process

We estimate the effects of works councils on productivity, 1997-2000, using the IAB Establishment Panel, a nationally representative German data set. We recoup the works council effect by estimating translog production functions, stochastic frontier production functions, and a model in first differences. Once we focus on a core sample of establishments with 21 to 100 employees in which the powers of the works council are a datum, it emerges that the positive productivity differential found in recent studies is a chimera. By the same token, neither is the works council effect negative. This result is important in its own right given the sharply opposing findings of past empirical research and the partisan positions these have helped sustain. -- Anhand des IAB-Betriebspanels, eines repräsentativen deutschen Firmendatensatzes, schätzen wir die Produktivitätswirkungen von Betriebsräten für den Zeitraum 1997-2000. Wir ermitteln den Betriebsratseffekt durch Schätzung von Translog-Produktionsfunktionen und Modellen in ersten Differenzen sowie durch stochastische Produktionsrandschätzungen. Wenn wir uns auf eine Kernstichprobe von Betrieben mit 21 bis 100 Beschäftigten konzentrieren, innerhalb derer die Rechte des Betriebsrats sich nicht ändern, erweist sich das in jüngeren Studien gefundene positive Produktivitätsdifferenzial als Chimäre. Allerdings fällt der Betriebsratseffekt auch nicht negativ aus. Diese Erkenntnis ist angesichts der extrem gegensätzlichen Ergebnisse früherer Studien und der darauf aufbauenden konträren Positionen besonders wichtig.Works council,production functions,panel data,Germany

Methods of household consumption measurement through surveys : experimental results from Tanzania

Consumption expenditure has long been the preferred measure of household living standards. However, accurate measurement is a challenge and household expenditure surveys vary widely across many dimensions, including the level of reporting, the length of the reference period, and the degree of commodity detail. These variations occur both across countries and also over time within countries. There is little current understanding of the implications of such changes for spatially and temporally consistent measurement of household consumption and poverty. A field experiment in Tanzania tests eight alternative methods to measure household consumption on a sample of 4,000 households. There are significant differences between consumption reported by the benchmark personal diary and other diary and recall formats. Under-reporting is particularly relevant in illiterate households and for urban respondents completing household diaries; recall modules measure lower consumption than a personal diary, with larger gaps among poorer households and households with more adult members. Variations in reporting accuracy by household characteristics are also discussed and differences in measured poverty as a result of survey design are explored. The study concludes with recommendations for methods of survey based consumption measurement in low-income countries.Consumption,Regional Economic Development,Rural Poverty Reduction,Poverty Lines

Do Works Councils Inhibit Investment?

Theory suggests that firms confront a hold-up problem in dealing with workplace unionism: unions will appropriate a portion of the quasi rents stemming from long-lived capital. As a result, firms may be expected to limit their exposure to rent seeking by reducing investments, among other things. Although there is some empirical support for this prediction in firm-level studies for the United States, we investigate whether this is also the case in the different institutional context of Germany where the works council is the analogue of workplace unionism. Using parametric and nonparametric methods and establishment panel data, we find no evidence that the formation (dissolution) of a works council has an unfavorable (favorable) impact on investment. -- Theoretische Überlegungen deuten darauf hin, dass Firmen durch Arbeitnehmervertretungen auf Betriebsebene wie Gewerkschaften mit einem ?hold-up?-Problem konfrontiert werden, da letztere sich einen Teil der Quasi-Renten aus langlebigen Kapitalinvestitionen aneignen können. Deshalb mögen die Firmen ihre Anfälligkeit für derartiges ?rent seeking? dadurch verringern, dass sie ihre Investitionen zurückfahren. Während es für diese Hypothese empirische Bestätigungen durch Firmenstudien aus den USA gibt, untersuchen wir, ob dies auch in dem unterschiedlichen institutionellen Umfeld in Deutschland der Fall ist, wo statt Betriebsgewerkschaften Betriebsräte eine ähnliche Rolle spielen können. Unter Verwendung von parametrischen und nichtparametrischen Methoden sowie von Betriebspaneldaten finden wir keine empirischen Hinweise darauf, dass die Errichtung (bzw. Abschaffung) eines Betriebsrates einen negativen (bzw. positiven) Einfluss auf das betriebliche Investitionsverhalten hat.Investment,works councils,rent seeking,Germany,panel data

Works Councils, Labor Productivity and Plant Heterogeneity: First Evidence from Quantile Regressions

Using OLS and quantile regression methods and rich cross-section data sets for western and eastern Germany, this paper demonstrates that the impact of works council presence on labor productivity varies between manufacturing and services, between plants that are or are not covered by collective bargaining, and along the conditional distribution of labor productivity. No productivity effects of works councils are found for the service sector and in manufacturing plants not covered by collective bargaining. Besides demonstrating that it is important to look at evidence based on more than one data set, our empirical findings point to the efficacy of supplementing OLS with quantile regression estimates when investigating the behavior of heterogeneous plants.Labor productivity, works councils, quantile regressions, heterogeneous firms