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

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  • 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.

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Bibliographic Info

Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt1k21d0rg.

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Date of creation: 01 Mar 2005
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Handle: RePEc:cdl:indrel:qt1k21d0rg

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Keywords: Industrial Relations--Germany; Industrial Relations--United States; Layoffs; Employee Wages;

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  1. Alesina, Alberto F & Glaeser, Edward L & Sacerdote, Bruce, 2005. "Work and Leisure in the US and Europe: Why So Different?," CEPR Discussion Papers 5140, C.E.P.R. Discussion Papers.
  2. Chaness, Gary & Levine, David I., 1999. "Changes in the Employment Contract? Evidence from a Quasi-Experiment," Institute for Research on Labor and Employment, Working Paper Series qt4p535308, Institute of Industrial Relations, UC Berkeley.
  3. Robert E. Hall, 1984. "The Importance of Lifetime Jobs in the U.S. Economy," NBER Working Papers 0560, National Bureau of Economic Research, Inc.
  4. Jonas Agell, 2002. "On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance," German Economic Review, Verein für Socialpolitik, vol. 3(2), pages 107-135, 05.
  5. 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.
  6. Addison, John T. & Bellmann, Lutz & Schnabel, Claus & Wagner, Joachim, 2002. "German works councils old and new: incidence, coverage and determinants," Discussion Papers 10, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  7. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  8. Gary Charness & David I. Levine, 1999. "When are layoffs acceptable? Evidence from a quasi-experiment," Economics Working Papers 369, Department of Economics and Business, Universitat Pompeu Fabra.
  9. 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.
  10. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
  11. Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," ULB Institutional Repository 2013/5927, ULB -- Universite Libre de Bruxelles.
  12. 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.
  13. 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 728-41, September.
  14. Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, number 9780198292241, October.
  15. Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 25-44, Spring.
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Citations

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Cited by:
  1. 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.
  2. 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].
  3. Sven Fischer & Werner Güth, 2011. "Effects of exclusion on social preferences," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2011_34, Max Planck Institute for Research on Collective Goods.
  4. Brügemann, Björn, 2006. "Does Employment Protection Create Its Own Political Support?," IZA Discussion Papers 2286, Institute for the Study of Labor (IZA).
  5. Sven Fischer & Werner Güth, 2011. "Effects of exclusion on social preferences," Jena Economic Research Papers 2011-053, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  6. 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].
  7. 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].
  8. Fischer, Sven & Güth, Werner, 2012. "Effects of exclusion on acceptance in ultimatum games," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1100-1114.
  9. 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].

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