Mandatory sick pay provision: A labor market experiment
AbstractThe question whether a minimum rate of sick pay should be mandated is much debated. We study the effects of this kind of intervention with student subjects in an experimental laboratory setting rich enough to allow for moral hazard, adverse selection, and crowding out of good intentions. Both wages and replacement rates offered by competing employers are reciprocated by workers. However, replacement rates are only reciprocated as long as no minimum level is mandated. Although we observe adverse selection when workers have different exogenous probabilities for being absent from work, this does not lead to a market breakdown. In our experiment, mandating replacement rates actually leads to a higher voluntary provision of replacement rates by employers.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 94 (2010)
Issue (Month): 11-12 (December)
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Web page: http://www.elsevier.com/locate/inca/505578
Sick pay Sick leave Experiment Gift exchange;
Other versions of this item:
- Stefan Bauernschuster & Jörg Oechssler & Peter Duersch & Radovan Vadovic, 2009. "Mandatory Sick Pay Provision: A Labor Market Experiment," Jena Economic Research Papers 2009-076, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Bauernschuster, Stefan & Duersch, Peter & Oechssler, Jörg & Vadovic, Radovan, 2010. "Mandatory Sick Pay Provision: A Labor Market Experiment," Working Papers 0498, University of Heidelberg, Department of Economics.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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