edoc

Internal rent seeking, works councils, and optimal establishment size

Beckmann, Michael and Kräkel, Matthias. (2012) Internal rent seeking, works councils, and optimal establishment size. European economic review, 56 (4). pp. 711-726.

Full text not available from this repository.

Official URL: http://edoc.unibas.ch/dok/A6070585

Downloads: Statistics Overview

Abstract

Using a microeconomic model and data from the Establishment Panel of the German Institute for Employment Research, we analyze the optimal establishment size against the background of rent-seeking workers and the influence of works councils. The theoretical part shows that establishment size has a discouragement effect on the level of individual rent seeking but also a quantity effect as the number of rent seekers increases. The interplay of both effects -- together with technological considerations -- determines whether the employer chooses an inefficiently small or large establishment size. Introduction of a works council restores efficient establishment size although it is purely used as rent-seeking device. Whether the employer benefits from a works council or not, depends on the degree of contract incompleteness and the degree of worker coordination via a works council. The empirical part indicates dominance of the discouragement effect over the quantity effect in establishments without works council. As theoretically predicted, works councils are beneficial by disentangling rent-seeking and production issues, thus eliminating the influence of the two rent-seeking effects.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Personal und Organisation (Beckmann)
UniBasel Contributors:Beckmann, Michael
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:North Holland Publ.
ISSN:0014-2921
Note:Publication type according to Uni Basel Research Database: Journal article
Identification Number:
Last Modified:05 Apr 2018 09:44
Deposited On:01 Mar 2013 11:09

Repository Staff Only: item control page