IDEAS home Printed from https://ideas.repec.org/p/cdl/indrel/qt1k21d0rg.html
   My bibliography  Save this paper

The Acceptability of Layoffs and Pay Cuts: Comparing North America with Germany

Author

Listed:
  • Gerlach, Knut
  • Levine, David I.
  • Stephan, Gesine
  • Struck, Olaf

Abstract

Substantial evidence shows that North Americans are generally more accepting of the market than Europeans and attribute market outcomes to a larger degree to effort or skill. Thus, we expect North Americans to be more accepting of layoffs and pay cuts than Germans and that Germans will be more sensitive to the procedures and conditions under which pay cuts and lay-offs occur. The empirical results from our quasi-experimental study are largely in line with our hypotheses. These results may help explain and be explained by the different labour market in-stitutions in the different regions.

Suggested Citation

  • Gerlach, Knut & Levine, David I. & Stephan, Gesine & Struck, Olaf, 2005. "The Acceptability of Layoffs and Pay Cuts: Comparing North America with Germany," Institute for Research on Labor and Employment, Working Paper Series qt1k21d0rg, Institute of Industrial Relations, UC Berkeley.
    • Handle: RePEc:cdl:indrel:qt1k21d0rg
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/1k21d0rg.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    2. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 437-459.
    3. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2005. "Work and Leisure in the U. S. and Europe: Why so Different?," Harvard Institute of Economic Research Working Papers 2068, Harvard - Institute of Economic Research.
    4. Agell Jonas, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, De Gruyter, vol. 3(2), pages 107-135, May.
    5. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
    6. Charness, Gary & Levine, David I., 2002. "Changes in the employment contract?: Evidence from a quasi-experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 47(4), pages 391-405, April.
    7. Keyssar,Alexander, 1986. "Out of Work," Cambridge Books, Cambridge University Press, number 9780521297677.
    8. David I. Levine & Dale Belman & Gary Charness & Erica L. Groshen & K.C. O'Shaughnessy, 2002. "How New is the "New Employment Contract"? Evidence from North American Pay Practices," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number nec, November.
    9. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "German Works Councils Old and New: Incidence, Coverage and Determinants," IZA Discussion Papers 495, Institute of Labor Economics (IZA).
    10. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers 88-05, Rochester, Business - Managerial Economics Research Center.
    11. Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, number 9780198292241, Decembrie.
    12. Gary Charness & David I. Levine, 2000. "When are Layoffs Acceptable? Evidence from a Quasi-Experiment," ILR Review, Cornell University, ILR School, vol. 53(3), pages 381-400, April.
    13. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-724, September.
    14. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    15. Oliver E. Williamson & Michael L. Wachter & Jeffrey E. Harris, 1975. "Understanding the Employment Relation: The Analysis of Idiosyncratic Exchange," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 250-278, Spring.
    16. Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 25-44, Spring.
    17. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian Eichhorn & David Pehlke, 2022. "Unintended effects of regional planning in Germany," Growth and Change, Wiley Blackwell, vol. 53(2), pages 933-950, June.
    2. Björn Brügemann, 2012. "Does Employment Protection Create Its Own Political Support?," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 369-416, April.
    3. Fischer, Sven & Güth, Werner, 2012. "Effects of exclusion on acceptance in ultimatum games," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1100-1114.
    4. Sven Fischer & Werner Güth, 2011. "Effects of exclusion on social preferences," Jena Economics Research Papers 2011-053, Friedrich-Schiller-University Jena.
    5. Laura Romeu Gordo, 2011. "Compression of morbidity and the labour supply of older people," Applied Economics, Taylor & Francis Journals, vol. 43(4), pages 503-513.
    6. Hohendanner, Christian, 2007. "Verdrängen Ein-Euro-Jobs sozialversicherungspflichtige Beschäftigung in den Betrieben?," IAB-Discussion Paper 200708, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Kruppe, Thomas, 2006. "Die Förderung beruflicher Weiterbildung : eine mikroökonometrische Evaluation der Ergänzung durch das ESF-BA-Programm," IAB-Discussion Paper 200621, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Büttner, Thomas, 2007. "Ankündigungseffekt oder Maßnahmewirkung? : eine Evaluation von Trainingsmaßnahmen zur Überprüfung der Verfügbarkeit," IAB-Discussion Paper 200725, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Eckey, Hans-Friedrich & Schwengler, Barbara & Türck, Matthias, 2007. "Vergleich von deutschen Arbeitsmarktregionen," IAB-Discussion Paper 200703, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Blien, Uwe & Kirchhof, Kai & Ludewig, Oliver, 2006. "Agglomeration effects on labour demand," IAB-Discussion Paper 200628, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Gesine Stephan & Sven Uthmann, 2014. "Wann wird negative Reziprozität am Arbeitsplatz akzeptiert? Eine quasi-experimentelle Untersuchung," Working Paper Series in Economics 321, University of Lüneburg, Institute of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Koch, 2021. "Can reference points explain wage rigidity? Experimental evidence," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-17, December.
    2. Goeree, Jacob K. & Riedl, Arno & Ule, Aljaz, 2009. "In search of stars: Network formation among heterogeneous agents," Games and Economic Behavior, Elsevier, vol. 67(2), pages 445-466, November.
    3. Jordi Brandts & Arno Riedl & Frans van Winden, 2004. "Competition and Well-Being," Working Papers 120, Barcelona School of Economics.
    4. Gary Charness & David I. Levine, 2000. "When are Layoffs Acceptable? Evidence from a Quasi-Experiment," ILR Review, Cornell University, ILR School, vol. 53(3), pages 381-400, April.
    5. Gary Charness, 2004. "Attribution and Reciprocity in an Experimental Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 665-688, July.
    6. Simon G�chter & Armin Falk, "undated". "Work motivation, institutions, and performance," IEW - Working Papers 062, Institute for Empirical Research in Economics - University of Zurich.
    7. Andreas Leibbrandt, 2016. "Behavioral Constraints on Pricing: Experimental Evidence on Price Discrimination and Customer Antagonism," CESifo Working Paper Series 6214, CESifo.
    8. Grossmann, Volker, 2002. "Is it rational to internalize the personal norm that one should reciprocate?," Journal of Economic Psychology, Elsevier, vol. 23(1), pages 27-48, February.
    9. Ernst Fehr & Urs Fischbacher, "undated". "Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition," IEW - Working Papers 084, Institute for Empirical Research in Economics - University of Zurich.
    10. Sohr, Tatjana, 2005. "Wenn die Karriereleiter wegbricht: Fairness und der Abbau von Hierarchieebenen (When the career ladder is removed * fairness and the elimination of hierarchical levels)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(1), pages 68-86.
    11. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    12. Bereby-Meyer, Yoella & Niederle, Muriel, 2005. "Fairness in bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 56(2), pages 173-186, February.
    13. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
    14. Linfeng Chen, 2021. "Reciprocity Game," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 131-141, January.
    15. Bart J. Wilson, 2012. "Contra Private Fairness," American Journal of Economics and Sociology, Wiley Blackwell, vol. 71(2), pages 407-435, April.
    16. John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 1-37, February.
    17. Holger Herz & Dmitry Taubinsky, 2018. "What Makes a Price Fair? An Experimental Study of Transaction Experience and Endogenous Fairness Views," Journal of the European Economic Association, European Economic Association, vol. 16(2), pages 316-352.
    18. Sprinkle, Geoffrey B., 2003. "Perspectives on experimental research in managerial accounting," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 287-318.
    19. Balafoutas, Loukas & Kocher, Martin G. & Putterman, Louis & Sutter, Matthias, 2013. "Equality, equity and incentives: An experiment," European Economic Review, Elsevier, vol. 60(C), pages 32-51.
    20. Conlin, Michael & Lynn, Michael & O'Donoghue, Ted, 2003. "The norm of restaurant tipping," Journal of Economic Behavior & Organization, Elsevier, vol. 52(3), pages 297-321, November.

    More about this item

    Keywords

    Industrial Relations--Germany; Industrial Relations--United States; Layoffs; Employee Wages;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:indrel:qt1k21d0rg. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/irucbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.