Worker Representatives

Abstract:

We study the selection of worker representatives and how representation affects worker outcomes. We focus on German works councilors---shop-floor representatives elected from the workforce. We paint a comprehensive picture of representatives’ characteristics spanning a period of more than forty years, combining rich administrative panel and representative survey data. Contrary to other domains of power where blue-collar workers are often underrepresented, we document that blue-collar workers have been close to proportionally represented among works councilors for the past four decades with a shrinking representation gap over time. Worker representatives are positively selected in terms of  earnings and person-fixed effects. They tend to have more extroverted, more open, and less neurotic personalities, show greater interest in politics, and lean left politically, compared to the populations they represent. Drawing on event study designs around scheduled works council elections, as well as an instrumental variables strategy building on representatives retiring, we study the effects of blue-collar representation on worker outcomes. We find that electing blue-collar representatives protects workers from involuntary layoffs and mildly compresses wages. Our results support the hypothesis that blue-collar representatives place greater emphasis on job security, in line with higher worries about layoffs and risk of unemployment faced by blue-collar workers.