IAAEU researchers Laszlo Goerke, Sven A. Hartmann and Yue Huang have published a paper titled "Councils of Contentment: Works Councils and Income Perceptions" in the Journal of Population Economics.
The study investigates workplace co-determination—a central feature of the German labour market that plays a vital role at the establishment level in many firms. While previous research has extensively examined how works councils affect objective metrics like wages and productivity, much less is known about the relationship to employees’ subjective perceptions of their work and income.
Using data from the German Socio-Economic Panel (SOEP), the authors demonstrate that employees in firms with works councils report higher income satisfaction than comparable employees in non-co-determined firms. This positive relationship holds true across a wide range of empirical specifications and for various employee groups. The study highlights that perceived wage fairness, more favourable positions in the income distribution, and better working conditions are important ingredients in explaining this link.
The findings emphasize that workplace institutions influence not only tangible economic outcomes, but also employees’ broader perceptions of fairness and well-being. Ultimately, co-determination may contribute to more attractive and sustainable workplaces, benefiting employees and employers alike.
Link to the Paper
An earlier version of the study is available as IAAEU Discussion Paper 02/2026.
The study investigates workplace co-determination—a central feature of the German labour market that plays a vital role at the establishment level in many firms. While previous research has extensively examined how works councils affect objective metrics like wages and productivity, much less is known about the relationship to employees’ subjective perceptions of their work and income.
Using data from the German Socio-Economic Panel (SOEP), the authors demonstrate that employees in firms with works councils report higher income satisfaction than comparable employees in non-co-determined firms. This positive relationship holds true across a wide range of empirical specifications and for various employee groups. The study highlights that perceived wage fairness, more favourable positions in the income distribution, and better working conditions are important ingredients in explaining this link.
The findings emphasize that workplace institutions influence not only tangible economic outcomes, but also employees’ broader perceptions of fairness and well-being. Ultimately, co-determination may contribute to more attractive and sustainable workplaces, benefiting employees and employers alike.
Link to the Paper
An earlier version of the study is available as IAAEU Discussion Paper 02/2026.
