Severance Payments for Dismissed Employees Severance Payments for Dismissed Employees in Germany

Christian Grund ()

Bonn Econ Discussion Papers from University of Bonn, Germany

Abstract: This contribution investigates severance payments for dismissed employees in Germany. Particularly, it responds to the following questions: Who receives severance payments? By which characteristics is the level of severance payments determined? Is overcompensation to be considered a relevant issue? Hereby, individual and collective dismissals are distinguished. This is the first study on this issue using individual representative data ­ the German Socio-Economic Panel ­ and multivariate methods. The results indicate that rather women, persons with many years of tenure and working in big firms receive severance payments. There is a huge variance in the size of the payments, which can only partly be explained by tenure, the wage and citizenship. About one quarter of dismissed employees is better off in their following careers independent of having received a severance payment.

Keywords: Severance Payments; Dismissals; Plant closings; Dismissal (search for similar items in EconPapers)
JEL-codes: M51 M52 J65 J32 J53 (search for similar items in EconPapers)
Date: Written
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