Separating introduction effects from selectivity effects : the differences in employment patterns of co-determined firms

This study examines differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects. Using a difference in differences framework, we show that firms with works councils have higher employment growth before establishing a works council. However, employment growth declines after introduction. We identify the reason for lower employment growth in reduced hiring rates but constant dismissal rates. -- works councils ; hires ; dismissals ; employment growth ; difference-in-differences