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Labor Representation in Governance as an Insurance Mechanism
Abstract We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex post mechanism to enforce implicit insurance contracts protecting employees against adverse shocks. Results based on German establishment-level data show that...
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Published in: | Review of Finance 2018-07, Vol.22 (4), p.1251-1289 |
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cited_by | cdi_FETCH-LOGICAL-c354t-71175628914eb3c536c0b463c66378ee7ac46d98571937bcab38dea8565072e63 |
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container_issue | 4 |
container_start_page | 1251 |
container_title | Review of Finance |
container_volume | 22 |
creator | Kim, E Han Maug, Ernst Schneider, Christoph |
description | Abstract
We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex post mechanism to enforce implicit insurance contracts protecting employees against adverse shocks. Results based on German establishment-level data show that skilled employees of firms with 50% labor representation on boards are protected against layoffs during adverse industry shocks. They pay an insurance premium of 3.3% in the form of lower wages. Unskilled blue-collar workers are unprotected against shocks. Our evidence suggests that workers capture all the gains from improved risk sharing, whereas shareholders are no better or worse off than without codetermination. |
doi_str_mv | 10.1093/rof/rfy012 |
format | article |
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We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex post mechanism to enforce implicit insurance contracts protecting employees against adverse shocks. Results based on German establishment-level data show that skilled employees of firms with 50% labor representation on boards are protected against layoffs during adverse industry shocks. They pay an insurance premium of 3.3% in the form of lower wages. Unskilled blue-collar workers are unprotected against shocks. Our evidence suggests that workers capture all the gains from improved risk sharing, whereas shareholders are no better or worse off than without codetermination.</description><identifier>ISSN: 1572-3097</identifier><identifier>EISSN: 1573-692X</identifier><identifier>EISSN: 1875-824X</identifier><identifier>DOI: 10.1093/rof/rfy012</identifier><language>eng</language><publisher>Oxford: Oxford University Press</publisher><subject>Economic models ; Employees ; Risk sharing</subject><ispartof>Review of Finance, 2018-07, Vol.22 (4), p.1251-1289</ispartof><rights>The Author(s) 2018. Published by Oxford University Press on behalf of the European Finance Association. All rights reserved. For Permissions, please email: journals.permissions@oup.com 2018</rights><rights>The Author(s) 2018. Published by Oxford University Press on behalf of the European Finance Association. All rights reserved. For Permissions, please email: journals.permissions@oup.com</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c354t-71175628914eb3c536c0b463c66378ee7ac46d98571937bcab38dea8565072e63</citedby><cites>FETCH-LOGICAL-c354t-71175628914eb3c536c0b463c66378ee7ac46d98571937bcab38dea8565072e63</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,27924,27925</link.rule.ids></links><search><creatorcontrib>Kim, E Han</creatorcontrib><creatorcontrib>Maug, Ernst</creatorcontrib><creatorcontrib>Schneider, Christoph</creatorcontrib><title>Labor Representation in Governance as an Insurance Mechanism</title><title>Review of Finance</title><description>Abstract
We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex post mechanism to enforce implicit insurance contracts protecting employees against adverse shocks. Results based on German establishment-level data show that skilled employees of firms with 50% labor representation on boards are protected against layoffs during adverse industry shocks. They pay an insurance premium of 3.3% in the form of lower wages. Unskilled blue-collar workers are unprotected against shocks. Our evidence suggests that workers capture all the gains from improved risk sharing, whereas shareholders are no better or worse off than without codetermination.</description><subject>Economic models</subject><subject>Employees</subject><subject>Risk sharing</subject><issn>1572-3097</issn><issn>1573-692X</issn><issn>1875-824X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2018</creationdate><recordtype>article</recordtype><recordid>eNp9kMFKAzEQhoMoWKsXn2BBvAhrk8wm2YAXKVoLFUEUvIVsOotb2mRNdoW-vWvXs6eZgW9-fj5CLhm9ZVTDLIZ6Fus9ZfyITJhQkEvNP44PO8-BanVKzlLaUArAQUzI3cpWIWav2EZM6DvbNcFnjc8W4Rujt95hZlNmfbb0qY-H-xndp_VN2p2Tk9puE178zSl5f3x4mz_lq5fFcn6_yh2IossVY0pIXmpWYAVOgHS0KiQ4KUGViMq6Qq51KRTToCpnKyjXaEshBVUcJUzJ1ZjbxvDVY-rMJvRDuW0ynNPhq9SCDtTNSLkYUopYmzY2Oxv3hlHza8cMdsxoZ4CvRzj07X_cD-g0Y-0</recordid><startdate>20180701</startdate><enddate>20180701</enddate><creator>Kim, E Han</creator><creator>Maug, Ernst</creator><creator>Schneider, Christoph</creator><general>Oxford University Press</general><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20180701</creationdate><title>Labor Representation in Governance as an Insurance Mechanism</title><author>Kim, E Han ; Maug, Ernst ; Schneider, Christoph</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c354t-71175628914eb3c536c0b463c66378ee7ac46d98571937bcab38dea8565072e63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2018</creationdate><topic>Economic models</topic><topic>Employees</topic><topic>Risk sharing</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Kim, E Han</creatorcontrib><creatorcontrib>Maug, Ernst</creatorcontrib><creatorcontrib>Schneider, Christoph</creatorcontrib><collection>CrossRef</collection><jtitle>Review of Finance</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Kim, E Han</au><au>Maug, Ernst</au><au>Schneider, Christoph</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Labor Representation in Governance as an Insurance Mechanism</atitle><jtitle>Review of Finance</jtitle><date>2018-07-01</date><risdate>2018</risdate><volume>22</volume><issue>4</issue><spage>1251</spage><epage>1289</epage><pages>1251-1289</pages><issn>1572-3097</issn><eissn>1573-692X</eissn><eissn>1875-824X</eissn><abstract>Abstract
We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex post mechanism to enforce implicit insurance contracts protecting employees against adverse shocks. Results based on German establishment-level data show that skilled employees of firms with 50% labor representation on boards are protected against layoffs during adverse industry shocks. They pay an insurance premium of 3.3% in the form of lower wages. Unskilled blue-collar workers are unprotected against shocks. Our evidence suggests that workers capture all the gains from improved risk sharing, whereas shareholders are no better or worse off than without codetermination.</abstract><cop>Oxford</cop><pub>Oxford University Press</pub><doi>10.1093/rof/rfy012</doi><tpages>39</tpages><oa>free_for_read</oa></addata></record> |
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issn | 1572-3097 1573-692X 1875-824X |
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source | EBSCOhost Business Source Ultimate; Oxford Journals Online; EBSCO_EconLit with Full Text(美国经济学会全文数据库) |
subjects | Economic models Employees Risk sharing |
title | Labor Representation in Governance as an Insurance Mechanism |
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