Employee participation in management, bargaining power and wages

The paper analyzes the impact of employee participation in management on bargaining power and wages. It presents an empirical model which allows for variable bargaining powers of the parties who jointly control the firm and it tests this model with postwar West German data. The results suggest that ‘parity codetermination’ has had a positive effect on earnings in iron and steel but not in coal mining. Moreover, it appears that the positive effect in iron and steel could be due to increased profitability rather than an increase in the bargaining power of labor as defined in this study