Do unions and works councils really dampen the gender pay gap? Discordant evidence from Germany

Using a large employer\u2013employee dataset, we provide new evidence on the relationship between the gender pay gap and industrial relations from within German workplaces. Controlling for unobserved workplace heterogeneity, we find no evidence that introducing or abandoning collective agreements or works councils affects the gender pay gap. This result holds at the mean and along the distribution, challenging the stylized fact that unions and works councils dampen the gender pay gap

Owners, external managers and industrial relations in German establishments

Abstract Using data from the representative IAB Establishment Panel in Germany and estimating a heteroskedastic probit model with fixed effects, this paper finds a negative relationship between the existence of owner‐management in an establishment and the probabilities of having a works council or a collective bargaining agreement. We show that family firms which are solely managed by the owners or by external executives significantly differ in the presence of these kinds of worker representation. The probabilities of having works councils and (company‐level) collective agreements increase substantially if just some of the managers do not belong to the owner family. We argue that these differences cannot simply be attributed to an aversion of the owners against co‐determination and unions but suggest taking account of the notion of socio‐emotional wealth prevalent in family firms. In addition, our results support the idea that external managers mainly act as agents rather than stewards in family firms