German Industrial Relations: An Elusive Exemplar **

Abstract

The German system of industrial relations has long held a certain cachet outside that country. Recently, economists have joined its diverse group of supporters, noting in particular the potential efficiency benefits of the dual system. In the present paper, we investigate what has been learned about the effects of unionization and works councils on firm performance, and attempt to draw some lessons of wider application. We can find little evidence to suggest that these institutions are in practice associated with enhanced performance. For both this reason and the likely non-portability of German institutions, we would conclude that the notion that German industrial relations provide an exemplar to which others should aspire is premature at best. Das deutsche System der industriellen Beziehungen genießt im Ausland seit

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