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Employees working in establishments with works councils report significantly higher income satisfaction than those in non-co-determined firms, a relationship largely explained by income rank, perceived wage fairness, and working conditions. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

June 18, 2026Open Access

Councils of contentment: works councils and income perceptions

LGLaszlo GoerkeIfo Institute for Economic Research SHSven A. HartmannInstitute for Labour Law and Industrial Relations in the European Union YHYue HuangInstitute for Labour Law and Industrial Relations in the European Union

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Abstract

Abstract Using data from the German Socio-Economic Panel, we provide a comprehensive investigation of the relationship between workplace co-determination in the form of works councils and income satisfaction. Controlling for a wide range of individual, job-related, and firm-level characteristics in OLS and fixed effects specifications, we observe that employees working in establishments with a works council report significantly higher income satisfaction compared to their counterparts in non-co-determined firms. Rank in the income distribution, perceived fairness of the wage, and working conditions emerge as quantitatively relevant factors in explaining the positive correlation.

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