We hypothesize that companies with board level employee representation (BLER) should experience a lower probability of crisis-induced dismissals than other firms. Theoretically, we link this effect to the employee directors’ ability to reduce the in-formation asymmetry and moral hazard in employee-employer contracting, thereby facilitating the implementation of labor-cost adjustments that are an alternative to workforce dismissals. We confirm our hypotheses by analyzing the behavior of Scandinavian public corporations with/without employee directors during the Great Recession. We show that BLER associates with significantly lower performance-sensitivity of employment cuts during the crisis period. In these firms, the lower likelihood of employment reductions was in part ensured through alternative measures providing for a reduction of the labor costs per employee.
|Status||Udgivet - 2018|
|Begivenhed||IZA Workshop on the Economics of Employee Representation: International Perspectives - IZA - Institute of Labor Economics, Bonn, Tyskland|
Varighed: 7 sep. 2018 → 8 sep. 2018
|Workshop||IZA Workshop on the Economics of Employee Representation|
|Lokation||IZA - Institute of Labor Economics|
|Periode||07/09/2018 → 08/09/2018|
- Industrial relations
- Board of directors
- Employee directors
- Labor costs
- Great Recession
Gregoric, A., & Rapp, M. S. (2018). Board-Level Employee Representation and Firms' Responses to Crisis. Afhandling præsenteret på IZA Workshop on the Economics of Employee Representation, Bonn, Tyskland.