Rent Seeking at Plant Level: An Application of the Card-De la Rica Tenure Model to Workers in German Works Councils

Low-skilled workers enjoy a large wage advantage in German works council establishments. Since job tenure is also longer for these workers, one explanation might be rent-seeking. If the premium is a compensating wage differential (or a return to unmeasured ability), it should not lead to higher tenure; whereas if it is (partly) rent, lower quits should lead to longer tenure at plants with works councils. Our analysis uses the Card and de la Rica (2006) tenure model, and although the association between skill level and the works council tenure gap is positive it fails to achieve statistical significance in a single equation framework. However, running the tenure equation for separate skill quintiles, we find that those with the highest wage premium have the greatest tenure. As a result, although we cannot be certain that the works council wage mark-up of low-skilled workers is necessarily a non competitive rent, the observed pattern of job tenure across different skill subsamples is not after all inconsistent with rent-seeking behavior.

German Works Councils and the Anatomy of Wages

This paper provides a comprehensive examination of the effect of German works councils on wages, using matched employer-employee data from the German LIAB for 2001. In general, we find that works councils are associated with higher earnings, even after accounting for worker and establishment heterogeneity. At this level, the works council premium exceeds the collective bargaining mark-up, and is modestly higher in the presence of collective bargaining once we account for worker selection into the two institutions. More specifically, works councils do seem to benefit women relatively and to build on collective bargaining in this regard. They also seem to favor foreign, east-German, and service-sector workers although the effects of collective bargaining are not always reinforcing. The evidence from quantile regressions suggests that only in conjunction with collective bargaining is the narrowing influence of works councils really clear-cut. The above findings pertain to workers in all plants. Once we consider smaller establishments with 21-100 employees, however, each of these results is further qualified, beginning with the effect on wage levels where premia are now only observed in conjunction with collective bargaining.works councils, collective bargaining coverage, matched employer-employee data, wages, wage distribution.

The Impact of Works Councils on Wages

This paper investigates for the first time the effect of works councils on the anatomy of wages, using matched employer-employee data from the German LIAB for 2001. We find that works councils are associated with higher earnings. The wage premium is roughly comparable with the combined effect of sectoral and plant collective bargaining proper. This result persists after taking account of worker and establishment heterogeneity and the endogeneity of works council presence. Next, using quantile regressions, we find that the works council premium is decreasing with the position of the worker in the wage distribution. And it is also higher for women than for men. Finally, in addition to attenuating the gender wage gap and reducing wage dispersion, works councils have a small but significantly positive impact on tenure after controlling for wages. This suggests that there is some rent sharing; even if, overall, the entity’s voice effects appear to dominate its monopoly effects.

Works councils and the anatomy of wages

This paper provides the first full examination of the effect of German works councils on wages using matched employer-employee data (specifically, the LIAB for 2001). We find that works councils are associated with higher earnings. The wage premium is around 11 percent (and is higher under collective bargaining). This result persists after taking account of worker and establishment heterogeneity and the endogeneity of works council presence. Next, using quantile regressions, we find that the works council premium is decreasing with the position of the worker in the wage distribution. And it is also higher for women than for men. Finally, the works council wage premium is associated with longer job tenure. This suggests that some of the premium is a noncompetitive rent, even if works council voice may dominate its distributive effects insofar as tenure is concerned. --matched employer-employee data,rent seeking,tenure,wages,wage distribution,works councils

Rent Seeking at Plant Level: An Application of the Card-de la Rica Tenure Model to Workers in German Works Councils

Low-skilled workers enjoy a large wage advantage in German works council establishments. Since job tenure is also longer for these workers, one explanation might be rent-seeking. If the premium is a compensating wage differential (or a return to unmeasured ability), it should not lead to higher tenure; whereas if it is (partly) rent, lower quits should lead to longer tenure at plants with works councils. Our analysis uses the Card and de la Rica (2006) tenure model, and although the association between skill level and the works council tenure gap is positive it fails to achieve statistical significance in a single equation framework. However, running the tenure equation for separate skill quintiles, we find that those with the highest wage premium have the greatest tenure. As a result, although we cannot be certain that the works council wage mark-up of low-skilled workers is necessarily a non-competitive rent, the observed pattern of job tenure across different skill subsamples is not after all inconsistent with rent-seeking behavior.works councils, rent seeking, matched employer-employee data, wages, job tenure.

German Works Councils and The Anatomy of Wages

This paper provides the first comprehensive examination of the effect of German works councils on wages, using matched employer-employee data from the German LIAB for 2001. We find that works councils are associated with higher earnings: the wage premium is around 11 percent, and is higher under formal collective bargaining. This result persists after taking account of worker and establishment heterogeneity and the endogeneity of works council presence. Using quantile regressions, we further report that the works council premium is decreasing in the position of the worker in the wage distribution; and is higher for women than for men. Finally, the works council wage premium is associated with longer job tenure, which suggests that some of the premium is a noncompetitive rent. That said, it remains entirely possible that works council ÔvoiceÕ may dominate its distributive effects, at least insofar as the tenure result is concerned.matched employer-employee data, rent seeking, tenure, wages, wage distribution, works councils, collective bargaining.

Combining All Pairs Shortest Paths and All Pairs Bottleneck Paths Problems

We introduce a new problem that combines the well known All Pairs Shortest Paths (APSP) problem and the All Pairs Bottleneck Paths (APBP) problem to compute the shortest paths for all pairs of vertices for all possible flow amounts. We call this new problem the All Pairs Shortest Paths for All Flows (APSP-AF) problem. We firstly solve the APSP-AF problem on directed graphs with unit edge costs and real edge capacities in $\tilde{O}(\sqrt{t}n^{(\omega+9)/4}) = \tilde{O}(\sqrt{t}n^{2.843})$ time, where $n$ is the number of vertices, $t$ is the number of distinct edge capacities (flow amounts) and $O(n^{\omega}) < O(n^{2.373})$ is the time taken to multiply two $n$-by-$n$ matrices over a ring. Secondly we extend the problem to graphs with positive integer edge costs and present an algorithm with $\tilde{O}(\sqrt{t}c^{(\omega+5)/4}n^{(\omega+9)/4}) = \tilde{O}(\sqrt{t}c^{1.843}n^{2.843})$ worst case time complexity, where $c$ is the upper bound on edge costs

Youth Unemployment After Apprenticeship Training and Individual, Occupation and Training Employer Characteristics

This paper analyses the risk of unemployment , unemployment duration and the risk of long-term unemployment immediately after apprenticeship graduation. Unemployed apprenticeship graduates constitute a large share of unemployed youth in Germany but unemployment incidence within this group is unequally distributed. Our paper extends previous research in three dimensions. It shows that (i) individual productivity assessment of the training firm, (ii) initial selection in to high reputation training firms and occupations, and (iii) adverse selection of employer moving graduates are correlated with unemployment after apprenticeship graduation