The acceptability of layoffs and pay cuts: comparing North America with Germany

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.

[1]  Bernd Fitzenberger,et al.  Employment effects of the provision of specific professional skills and techniques in Germany , 2005, SSRN Electronic Journal.

[2]  Gary Charness,et al.  Social preferences: Some simple tests and a new model , 2000 .

[3]  Walter J. Murphy,et al.  The Employment Outlook , 1947 .

[4]  G. Leventhal,et al.  The Distribution of Rewards and Resources in Groups and Organizations , 1976 .

[5]  G. Corneo.  Inequality and the State: Comparing U.S. And German Preferences , 2000, SSRN Electronic Journal.

[6]  E. Fehr,et al.  When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets , 1998, Journal of Labor Economics.

[7]  P. Blau.  Exchange and Power in Social Life , 1964 .

[8]  G. Charness,et al.  Changes in the Employment Contract? Evidence from a Quasi-Experiment , 1999 .

[9]  Denise M. Rousseau,et al.  Psychological contracts in employment : Cross-national perspectives , 2000 .

[10]  Rainer Winkelmann,et al.  Training, Earnings and Mobility in Germany , 1994 .

[11]  Denise M. Rousseau,et al.  Psychological contracts in employment , 2001 .

[12]  R. Hall,et al.  The Importance of Lifetime Jobs in the U.S. Economy , 1980 .

[13]  Philip M. Podsakoff,et al.  Accounting for Organizational Citizenship Behavior: Leader Fairness and Task Scope versus Satisfaction , 1990 .

[14]  M. Ureta,et al.  The Importance of Lifetime Jobs in the U.S. Economy, Revisited , 1992 .

[15]  Paul R. Milgrom,et al.  Economics, Organization and Management , 1992 .

[16]  Robert H. Moorman,et al.  Relationship between organizational justice and organizational citizenship behaviors : do fairness perceptions influence employee citizenship ? , 1991 .

[17]  Gesine Stephan,et al.  Collective Contracts, Wages and Wage Dispersion in a Multi-Level Model , 2004 .

[18]  Stephan L. Thomsen,et al.  Individual employment effects of job creation schemes in Germany with respect to sectoral heterogeneity , 2005 .

[19]  Michael Lechner,et al.  Long-Run Effects of Public Sector Sponsored Training in West Germany , 2004, SSRN Electronic Journal.

[20]  J. Brockner.  Managing the Effects of Layoffs on Survivors , 1992 .

[21]  W. Eichhorst,et al.  The Interaction of Labor Market Regulation and Labor Market Policies in Welfare State Reform , 2005, SSRN Electronic Journal.

[22]  When are Layoffs Acceptable? Evidence from a Quasi-Experiment , 2000 .

[23]  J. Wagner,et al.  German Works Councils Old and New: Incidence, Coverage and Determinants , 2002, SSRN Electronic Journal.

[24]  H. Farber,et al.  The Changing Face of Job Loss in the United States, 1981-1993 , 1996 .

[25]  When Social Forces Remove the Impact of Competition. Social Exchange in Experimental Labor Markets , 1995 .

[26]  S. Nickell,et al.  Unemployment in the OECD Since the 1960s. What Do We Know? , 2005 .

[27]  E. Fehr,et al.  Does Fairness Prevent Market Clearing? An Experimental Investigation , 1993 .

[28]  David I. Levine,et al.  Product quality and pay equity between lower-level employees and top management: An investigation of distributive justice theory. , 1992 .

[29]  J. Guarino.  Book Review Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. By Denise M. Rousseau. Sage, Thousand Oaks, California , 1998 .

[30]  Peter Herriot,et al.  The Content of the Psychological Contract , 1997 .

[31]  Alexander Reinberg,et al.  Vertrauter Befund: Höhere Bildung schützt auch in der Krise vor Arbeitslosigkeit , 2005 .

[32]  M. Rabin.  Published by: American , 2022 .

[33]  E. Schlicht.  On custom in the economy , 1998 .

[34]  Oliver E. Williamson,et al.  Understanding the employment relation: the analysis of idiosyncratic exchange , 1975 .

[35]  C. Barnard.  The Functions of the Executive , 1939 .

[36]  D. Rousseau.  Psychological contracts in organizations : understanding written and unwritten agreements , 1995 .

[37]  Edward L. Glaeser,et al.  Work and Leisure in the U.S. And Europe: Why so Different? , 2005 .

[38]  Uwe Blien,et al.  Local Economic Structure and Industry Development in Germany, 1993-2001 , 2004 .

[39]  Joel Brockner,et al.  Interactive Effects of Procedural Justice and Outcome Negativity on Victims and Survivors of Job Loss , 1994 .

[40]  J. Hills.  Inequality and the state , 2004 .

[41]  N. Anderson,et al.  The psychological contract in retrospect and prospect , 1998 .

[42]  D. Kahneman,et al.  CHAPTER EIGHT. Fairness as a Constraint on Profit Seeking: Entitlements in the Market , 2004 .

[43]  Margaret A. Neale,et al.  Procedural fairness and profit seeking: The perceived legitimacy of market exploitation , 1993 .

[44]  Gesine Stephan,et al.  How collective contracts and works councils reduce the gender wage gap , 2004 .

[45]  D. Levine.  Fairness, Markets, and Ability to Pay: Evidence from Compensation Executives , 1993 .

[46]  M. Konovsky,et al.  Citizenship behavior and social exchange. , 1994, Academy of Management journal. Academy of Management.

[47]  G. Charness,et al.  Changes in the employment contract , 2002 .

[48]  Alberto Alesina,et al.  Fairness and redistribution , 2005 .

[49]  Claus Schnabel,et al.  Collective Bargaining Structure and its Determinants: An Empirical Analysis with British and German Establishment Data , 2006 .

[50]  J. Agell.  On the Determinants of Labour Market Institutions: Rent Seeking vs. Social Insurance , 2000, SSRN Electronic Journal.

[51]  J. Hiltrop,et al.  The changing psychological contract: The human resource challenge of the 1990s , 1995 .

[52]  Christian Topalov,et al.  Out of Work: The First Century of Unemployment in Massachusetts , 1989 .

[53]  E. Fehr.  A Theory of Fairness, Competition and Cooperation , 1998 .

[54]  G. Charness.  Attribution and reciprocity in a simulated labor market: An experimental investigation , 1996 .