DP15874 Voice at Work

Author(s): Jarkko Harju, Simon Jäger, Benjamin Schoefer
Publication Date: March 2021
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Programme Areas: Labour Economics, Public Economics, Macroeconomics and Growth, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15874

How does boosting worker voice affect worker separations, job quality, wages, and firm performance? We study the 1991 introduction of a right to worker voice in Finland. The law granted workers in firms with at least 150 employees the right to elect representatives to company boards. The size-dependent introduction permits a difference-in-differences design. In contrast to exit-voice theory, we find no effects on voluntary job separations as a revealed-preference measure of job quality. We can also rule out small increases in the labor share or rent sharing, with some evidence for small pay premia increases, in particular at the bottom of the wage distribution. We detect a small reduction in involuntary separations, zero effects on worker health, and a moderate increase in survey-based subjective job quality. Regarding firm performance, we find, if anything, small positive effects on survival, productivity, and capital intensity. An additional 2008 introduction of shop-floor representation in smaller firms had similar, limited effects. Interviews and surveys indicate that worker representation facilitates information sharing and cooperation rather than shifting power or rents to labor.