The Reform of the German Works Constitution Act: A Critical Assessment

Since 1920, the thrust of German law on workplace codetermination has changed on a number of occasions. We describe the latest swing of the legislative pendulum—favoring works council formation and competence—and evaluate the case for it. We provide new information on the extent of works councils before reviewing the evidence on their economic effects, focusing on some new results from matched-plant data. If the former evidence points to a codetermination deficit, this shortfall does not appear to have negative consequences for workplace productivity, profitability, and employment.     

Fixed price equilibria in an overlapping generations model with investment

We study fixed price temporary equilibria (with rationing) and sequences of temporary equilibria in a three commodities (goods, labor, bonds) overlapping generations model with endogenous investment. Young consumers, living two periods, work, consume, and buy bonds for financing next period's consumption. New firms, existing for two periods, make a production plan for the next period, taking into account expected rationing, assumed similar to present rationing. The plan determines the amount of goods to buy as capital, financed by bonds. Old firms produce, using labor and the previously bought capital. Different regimes exist and expectations can be self-fulfilling and self-destroying.We are grateful to the referees for helpful comments.     

Business and Human Rights

What should, or can, businesses do about‘prisoners of conscience’? Sir Geoffrey Chandler CBE is Chairman of the recently founded Business Group of the British Section of Amnesty International.     

The choice between a tariff and a quota under uncertainty

Conclusions The results concerning the choice between a tariff and a quota under the assumption of perfect competition and three kinds of uncertainty are summarized in the table. An analysis of the uncertainty, under which a government using a tariff or a quota can determine the value of imports or the quantity domestically supplied (i.e. employment), gives neither the same result for the two instruments (equivalence) nor the same result for the three situations considered. Therefore the choice between a tariff and a quota in case of uncertainty depends on the purpose, and whether the initial uncertainty concerns domestic demand, foreign or domestic supply. This conclusion corresponds to the well-known phenomenon that in case of a disturbance to an open economy the choice between a change in the rate of exchange and a change in the demand policy depends both on the goal and on the kind of disturbance.