Works councils, union bargaining and quits in German firms

Abstract

Unsatisfied employees are likely to quit their current job if they have a better outside option. Worker codetermination and union bargaining might increase employees’ utility and make quits unnecessary. The article offers econometric evidence from a large-scale German establishment data set supporting the view that works councils, firm-level and industry-level union bargained collective agreements reduce the number of quits. Moreover, a strong interaction effect between both institutions exists. The results are robust for different subsamples and econometric methods.