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Do Employees Benefit from Worker Representation on Corporate Boards?

Author

Listed:
  • Christine Blandhol
  • Magne Mogstad
  • Peter Nilsson
  • Ola Lotherington Vestad
  • J. Peter Nilsson
Abstract
Do employees benefit from worker representation on corporate boards? Economists and policymakers are keenly interested in this question – especially lately, as worker representation is widely promoted as an important way to ensure the interests and views of the workers. To investigate this question, we apply a variety of research designs to administrative data from Norway. We find that a worker is paid more and faces less earnings risk if she gets a job in a firm with worker representation on the corporate board. However, these gains in wages and declines in earnings risk are not caused by worker representation per se. Instead, the wage premium and reduced earnings risk reflect that firms with worker representation are likely to be larger and unionized, and that larger and unionized firms tend to both pay a premium and provide better insurance to workers against fluctuations in firm performance. Conditional on the firm’s size and unionization rate, worker representation has little if any effect. Taken together, these findings suggest that while workers may indeed benefit from being employed in firms with worker representation, they would not benefit from legislation mandating worker representation on corporate boards.

Suggested Citation

  • Christine Blandhol & Magne Mogstad & Peter Nilsson & Ola Lotherington Vestad & J. Peter Nilsson, 2020. "Do Employees Benefit from Worker Representation on Corporate Boards?," CESifo Working Paper Series 8794, CESifo.
    • Handle: RePEc:ces:ceswps:_8794
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    References listed on IDEAS

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    Cited by:

    1. Jose Garcia-Louzao & Ruben Perez-Sanz, 2024. "Women’s Voice at Work and Family-Friendly Firms," CESifo Working Paper Series 10982, CESifo.
    2. Simon Jäger & Shakked Noy & Benjamin Schoefer, 2022. "What Does Codetermination Do?," ILR Review, Cornell University, ILR School, vol. 75(4), pages 857-890, August.
    3. Vladimir Pecheu, 2021. "Profit Sharing as a Bargaining Weapon Against Unions," Working Papers halshs-03247551, HAL.
    4. Dodini, Samuel & Stansbury, Anna & Willén, Alexander, 2023. "How Do Firms Respond to Unions?," IZA Discussion Papers 16697, Institute of Labor Economics (IZA).
    5. Chyz, James A. & Eulerich, Marc & Fligge, Benjamin & Romney, Miles A., 2023. "Codetermination and aggressive reporting: Audit committee employee representation, tax aggressiveness, and earnings management," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).
    6. Viola Corradini & Lorenzo Lagos & Garima Sharma, 2022. "Collective Bargaining for Women: How Unions Can Create Female-Friendly Jobs," Working Papers 2022-005, Brown University, Department of Economics.
    7. Vladimir Pecheu, 2021. "Profit Sharing as a Bargaining Weapon Against Unions," AMSE Working Papers 2135, Aix-Marseille School of Economics, France.

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    More about this item

    Keywords

    worker compensation; worker representation; corporate governance; unions;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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