Severance Payments for Dismissed Employees in Germany

Christian Grund ()

No 875, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This contribution investigates severance payments for dismissed employees in Germany. Subsequent to an overview about the legal framework, we respond 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 always 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, firm size and the region. At least 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 (search for similar items in EconPapers)
JEL-codes: M51 M52 J32 J53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-lab
Date: 2003-09
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Related works:
Journal Article: Severance payments for dismissed employees in Germany (2006)
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