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The Perceived Fairness of Layoffs in Germany: Participation, Compensation, or Avoidance?

  • Christian Pfeifer

    ()

This study analyses to what extend and under what circumstances layoffs are accepted in Germany. Principles of distributive justice and rules of procedural justice form the theoretical framework of the analysis. Based on this, hypotheses are generated, which are tested empirically in a telephone survey conducted between East and West Germans in 2004 (n = 3036). The empirical analysis accounts for the different points of views of implicated stakeholders and impartial spectators. Key findings are: (1) The management of a company can increase the acceptance of layoffs if the employees get some participation rights. (2) For impartial spectators generous compensation for those made redundant leads to a higher degree of perceived fairness. But job alliances are not even preferred to layoffs without measures to soften the blow of job loss. (3) Implicated stakeholders accept job alliances and perceive wage cuts as more fair than layoffs. However, compensation does not have the expected impact. Copyright Springer Science+Business Media, Inc. 2007

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File URL: http://hdl.handle.net/10.1007/s10551-006-9217-z
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Article provided by Springer in its journal Journal of Business Ethics.

Volume (Year): 74 (2007)
Issue (Month): 1 (August)
Pages: 25-36

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Handle: RePEc:kap:jbuset:v:74:y:2007:i:1:p:25-36
DOI: 10.1007/s10551-006-9217-z
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/social+sciences/applied+ethics/journal/10551/PS2

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  1. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
  2. Rabin, Mathew, 2002. "A Perspective on Psychology and Economics," Department of Economics, Working Paper Series qt4z78n1r9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Charness, Gary B & Levine, David I. I., 2000. "When Are Layoffs Acceptable? Evidence From A Quasi-Experiment," University of California at Santa Barbara, Economics Working Paper Series qt4vs7h4hh, Department of Economics, UC Santa Barbara.
  4. 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.
  5. 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.
  6. Franz Wolfgang & Pfeiffer Friedhelm, 2003. "Zur ökonomischen Rationalität von Lohnrigiditäten aus der Sicht von Unternehmen / The Rationale for Wage Rigidity: Employers' Viewpoint," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(1), pages 23-57, February.
  7. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March.
  8. Konow, James, 2001. "Fair and square: the four sides of distributive justice," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 137-164, October.
  9. Bergemann, Annette & Mertens, Antje, 2004. "Job Stability Trends, Layoffs, and Transitions to Unemployment: An Empirical Analysis for West Germany," IZA Discussion Papers 1368, Institute for the Study of Labor (IZA).
  10. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
  11. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
  12. von Krogh, Georg & Kameny, Marla, 2002. "Leap Before You Layoff:: Look For Creative Alternatives," European Management Journal, Elsevier, vol. 20(6), pages 664-670, December.
  13. Pfeifer, Christian, 2005. "Fairness and the labour market; A theoretical and empirical analysis of layoffs in Germany," Hannover Economic Papers (HEP) dp-328, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
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