{"title":"Minimum wage non-compliance: the role of co-determination","authors":"Laszlo Goerke, Markus Pannenberg","doi":"10.1007/s10657-024-09811-1","DOIUrl":null,"url":null,"abstract":"<p>We analyse how co-determination is related to non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no correlation between non-compliance and the difference between the minimum wage and the wage actually paid.</p>","PeriodicalId":51664,"journal":{"name":"European Journal of Law and Economics","volume":"19 1","pages":""},"PeriodicalIF":1.0000,"publicationDate":"2024-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Journal of Law and Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s10657-024-09811-1","RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
We analyse how co-determination is related to non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no correlation between non-compliance and the difference between the minimum wage and the wage actually paid.
期刊介绍：
The European Journal of Law and Economics provides readers with high-quality theoretical and empirical research in which both the legal and economic dimensions merge and combine. The journal welcomes articles that promote a better understanding of legal phenomena, legal decisions made by judges, courts or regulatory agencies, and involving economic tools. Theoretical papers are welcome, provided they have a strong basis in law and economics. We also welcome case studies, as well as empirical analyses – including empirical legal studies – and experimental investigations. The European Journal of Law and Economics does not favor any particular topic, but does have a focus on new and emerging problems. European themes are particularly welcome, because we feel it is important to exploit Europe’s considerable institutional diversity in order to build a more robust body of theory and empirical evidence. However, the purpose of the journal is also to showcase the diversity of law and economics approaches, as supplied by an international mix of authors. Drawing on the support of respected scholars from around the world, who serve as consulting editors and editorial board members, the Editors wish to give contributing authors the opportunity to improve their papers, while also offering them a quick and efficient review process.
Officially cited as: Eur J Law Econ
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