Works Councils: An Agency Perspective

This paper investigates the role of works councils in a simple agency framework in whichworks councils are supposed to monitor manager's information on behalf of the workforce,but they are independent agents who might pursue their private interest. First, we considerthat workers can incentivize works councils through contingent monetary payments. In orderto deter collusion, workers must pay higher compensations in states of nature where they canbe expropriated by potential coalitions among works councils and management. Collusionmakes contingent payments costly and reduces workers' payoffs. Second, when elections areused to align works councils' interest only well compensated representatives would face aninter-temporal trade-off between accepting management's transfers at first period and losingrents at the second period. Elections increase the cost of entering on collusive behaviour withmanagement and works councils will try to behave on the employees' interest.

• Fecha de publicación: 2014
• Institución: Universidad del Rosario
• Repositorio: Repositorio EdocUR - U. Rosario
• Idioma: spa
• OAI Identifier: oai:repository.urosario.edu.co:10336/15587
• Acceso en línea: https://revistas.urosario.edu.co/index.php/economia/article/view/3337; http://repository.urosario.edu.co/handle/10336/15587
• Palabra clave: Workplace Representation; Works Councils; Collusion; Elections
• License: Copyright (c) 2015 Revista de Economía del Rosario