Works councils: an agency perspective

Juan Gallego

No 10092, Documentos de Trabajo from Universidad del Rosario

Abstract: This paper investigates the role of works councils in a simple agency framework in which works councils are supposed to monitor manager´s information on behalf of the workforce, but they are independent agents who might pursue their private interest. First, we consider that workers can incentivizeworks councils through contingent monetary payments. In order to deter collusion, workers must pay higher compensations in states of nature where they can be expropriated by potential coalitions among works councils and management. Collusion makes contingent payments costly and reduces workers´ payoffs. Second, when elections are the exclusive mechanisms to align works councils´ interest, only well compensated representatives would face an intertemporal tradeoff between accepting management´s transfers at first period and losing rents at the second period. Elections increase the cost of entering on collusive behavior with management and works councils will try to behave on the employees´ interest.

Keywords: Workplace Representation; Works Councils; Collusion; Elections (search for similar items in EconPapers)
JEL-codes: J50 J53 J83 (search for similar items in EconPapers)
Pages: 30
Date: 2012-11-19
New Economics Papers: this item is included in nep-cta, nep-hrm and nep-mic
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http://repository.urosario.edu.co/handle/10336/11529

Related works:
Journal Article: Works Councils: An Agency Perspective (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000092:010092

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