Councils of contentment: works councils and income perceptions

Abstract Using data from the German Socio-Economic Panel, we provide a comprehensive investigation of the relationship between workplace co-determination in the form of works councils and income satisfaction. Controlling for a wide range of individual, job-related, and firm-level characteristics in OLS and fixed effects specifications, we observe that employees working in establishments with a works council report significantly higher income satisfaction compared to their counterparts in non-co-determined firms. Rank in the income distribution, perceived fairness of the wage, and working conditions emerge as quantitatively relevant factors in explaining the positive correlation.