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Open Access Publications from the University of California

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.

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