« Back to Results

Worker Participation in the 21st Century

Paper Session

Friday, Jan. 3, 2020 12:30 PM - 2:15 PM (PST)

Manchester Grand Hyatt, Harbor F
Hosted By: Labor and Employment Relations Association
  • Chair: Richard Freeman, Harvard University

Pie-Growing or Pie-Sharing? The Role of China's Democratic Management on Wages, Benefits and Productivity

Liwen Chen
,
East China Normal University
Zhongxing Su
,
Renmin University of China
Guanghua Wang
,
Clemson University

Abstract

Democratic Management (DM) is a notion of industrial democracy unique to China, which contains a set of institutions for workplace employee participation. Using data from "China Employer-Employee Matched Survey" (2013), this paper initiates an empirical examination on the effect of China's democratic management (DM) on wages, benefits and establishment-level productivity indicators. With respect to individual workers' wages, we find that the presence of DM institutions are associated with a 6% average wage premium for individual workers, which remains robust after accounting for endogenous selection of DM institutions. Most of the wage premium derives from the institution of "Factory Affairs Disclosure". In terms of benefits, we document that workers in firms with DM institutions enjoy more items of non-pecuniary benefits. The presence of Staff and Workers' Representation Congress increases workers' accessibility to various types of non-pecuniary workplace benefits. We also discuss how DM's wage effects vary with firms' industrial relation climates: the effects are more prominent in firms without union presence and in firms not covered by regional or sectoral collective agreements. At the firm-level, the DM institutions are negatively associated with profit-per-worker but positively associated with value-added per worker and total capital investment. These findings suggest that the DM institutions in China not only let employees have a "voice" over the distribution of joint economic gains, but also has the potential to increase the size of joint-gains.

Are Worker Management Committees Improving Factory Conditions? A Study of Participation Committees in ILO's Better Work Factories

Mahreen Khan
,
Massachusetts Institute of Technology

Abstract

The literature in the field of industrial relations suggests that voice plays an important role in determining workers welfare (Kochan, 1980). It is argued that worker voice matters in an organizational context not just as a means of democratizing the workplace but also providing workers a mechanism to address working conditions with management. However, traditional forms of worker voice, such as unions, have declined in the US (Kochan, Osterman, Locke and Piore, 2002; Kochan, Katz and McKersie, 1986; Farber, 1983) and other industrialized countries (Ebbinghaus and Visser, 1999). Correspondingly, the unions and collective bargaining mechanisms have historically been limited in scale in the context of developing industrial nations (Freeman, 2010) with significant resistance to freedom of association from employers and state institutions in most cases.

The uniform opposition to worker voice neglects moderating effects of management's response to union (Pohler and Luchak, 2013) and joint worker-management decision-making processes (Black and Lynch, 2001), which can positively impact productivity considerations. A large part of research has focused on collective employee voice as facilitated by labor unions (Freeman and Medoff, 1984) associated with outcomes specific to compensation, benefits, and productivity (Bennett and Kaufman, 2007). However, alternative forms of employee representation where voice is the implicit mechanism in empowering workers - although having received some attention in the context of European countries - remain largely unexplored in other institutional contexts. Also, past research provides limited empirical evidence in establishing the link between enabling voice in firms through worker engagement and subsequent changes in working conditions.

As a way to bridge the empirical gap in the literature, I propose to study the effects of establishing joint management-employee representation bodies that aim to facilitate worker voice in factory settings under the auspices of the International Labour Organisation's (ILO) Better Work Program (BWP).

What Forms of Representation do American Workers Want? Understanding How Workers Think About Labor Organization

William Thomas Kimball
,
Massachusetts Institute of Technology
Alexander Hertel-Fernandez
,
Columbia University
Thomas A. Kochan
,
Massachusetts Institute of Technology

Abstract

Recent evidence documents an increased interest among American workers in joining a union. At the same time there is revived debate among labor scholars, union leaders, politicians, and activists over the forms of labor representation best suited to meet the needs of the contemporary workforce. Yet little is known about what contemporary workers have to say about these debates. This paper uses a conjoint survey experiment fielded on a nationally representative sample of over 4,000 employees to explore the forms of representation workers want and are willing to support through dues. The authors compare interest in organizational forms that mirror the contemporary debates underway over alternative forms of labor representation. The results show that while workers value collective bargaining, they would be even more willing to join and financially support organizations currently unavailable under U.S. law and practice. The authors use these results to draw implications for the labor movement, worker advocacy groups, and the future of labor law.

Labor in the Boardroom

Simon Jaeger
,
Massachusetts Institute of Technology
Benjamin Schoefer
,
University of California-Berkeley
Joerg Heining
,
Institute for Employment Research-Nuremberg (IAB)

Abstract

We estimate the effects of a mandate allocating a third of corporate board seats to workers (shared governance). We study a reform in Germany that abruptly abolished this mandate for certain firms incorporated after August 1994 but locked it in for the older cohorts. In sharp contrast to the canonical hold-up hypothesis -- that increasing labor's power reduces owners' capital investment -- we find that granting formal control rights to workers raises capital formation. The capital stock, the capital-labor ratio, and the capital share all increase. Shared governance does not raise wage premia or rent sharing. It lowers outsourcing, while moderately shifting employment to skilled labor. Shared governance has no clear effect on profitability, leverage, or costs of debt. Overall, the evidence is consistent with richer models of industrial relations whereby shared governance raises capital by permitting workers to bargain over investment or by institutionalizing communication and repeated interactions between labor and capital.
Discussant(s)
John Addison
,
University of South Carolina
David Madland
,
Center for American Progress
Paulino Teixeira
,
University of Coimbra
JEL Classifications
  • J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining
  • J8 - Labor Standards: National and International