The Role of Works Councils for Severance Payments

22 Pages Posted: 8 May 2017

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Johannes Martin

RWTH Aachen University - School of Business and Economics

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Abstract

Using representative German employee data, we analyse the role of works councils for the incidence of severance payments subsequent to dismissals. While there is a positive relation with severance payments after those dismissals which stem from plant closings, the incidence of a works council is negatively associated with severance pay subsequent to individual layoffs. In both cases, we find a negative moderating effect of individuals' higher reemployment chances. We also explore gender differences and differences between the types of previously held jobs.

Keywords: dismissals, layoffs, plant closings, severance pay, works councils

JEL Classification: J53, J63, J65

Suggested Citation

Grund, Christian and Martin, Johannes, The Role of Works Councils for Severance Payments. IZA Discussion Paper No. 10750. Available at SSRN: https://ssrn.com/abstract=2964159

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Johannes Martin

RWTH Aachen University - School of Business and Economics ( email )

Templergraben 64
52056 Aachen, 52056
Germany

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