A Level Playing Field: An Optimal Weighting Scheme of Dismissal Protection Characteristics

Abstract

In collective redundancies, employers are forced to regard certain characteristics when deciding who to dismiss. This paper develops a procedure to derive an empirical-based weighting scheme between protection characteristics in Germany (age, disability, dependencies, and tenure). Up to now, an objective weighting scheme is missing, and employers bargain with employee's representatives about the weighting of the characteristics. In the suggested procedure, the relationships of the four characteristics with reemployment probabilities and the quality of the new job are estimated. Then, the relevant outcome variable is chosen applying life satisfaction analysis. Finally, based on the empirical results, a weighting scheme for the characteristics is proposed, which serves as a guideline in the process of collective redundancies.