Codetermination: A Poor Fit for U.S. Corporations

This paper argues that, given the legal, social, and institutional differences between Germany and the United States, the U.S. stands to experience fewer benefits and greater consequences.

2020

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Codetermination can dampen or eliminate information asymmetry between employers and workers. In 2015, only 7.2% of US private sector workers were covered under collective bargaining agreements. Meanwhile, 50.2% in Germany. Codetermination may create more friction and obstacles for corporate mergers and acquisitions. Codetermination could raise incentives for companies to (re)incorporate in foreign tax-havens. Codetermination in the U.S. may entail reducing the flexibility of corporate law, i.e. enacting more regulations, in order to prevent regulatory arbitrage.

authors

Horst Eudenmueller Jens Dammann

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Codetermination