Severance Payments for Dismissed Employees in Germany

Christian Grund

No 875, IZA Discussion Papers from Institute of Labor Economics (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: plant closings; severance payments; dismissals (search for similar items in EconPapers)
JEL-codes: J32 J53 M51 M52 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2003-09
New Economics Papers: this item is included in nep-eec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - revised version published in: European Journal of Law and Economics, 2006, 22, 49-71

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Related works:
Journal Article: Severance payments for dismissed employees in Germany (2006)
Working Paper: Severance Payments for Dismissed Employees in Germany (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp875

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