If worker-representatives have appropriate mechanisms for sharing information with the workforce, could increase productivity and innovation by improving information flow within firms.

“Assuming that worker representatives have an appropriate mechanism for sharing information with the workforce, worker representation on boards will increase the flow of information between employers and employees, increasing productivity. In recent work, Jäger et. al (2020) find that shared governance increases capital formation without affecting wages in Germany (finding that firms with shared governance show increased labor productivity between two and eight percent, larger fixed capital stock, and higher capital-labor ratios). However, these effects will be muted if there is not a robust mechanism for the workforce to share information collectively with their worker representative.”

theoretical