Advanced Search
MyIDEAS: Login to save this article or follow this journal

Mandatory sick pay provision: A labor market experiment

Contents:

Author Info

  • Bauernschuster, Stefan
  • Duersch, Peter
  • Oechssler, Jörg
  • Vadovic, Radovan

Abstract

The 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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V76-5100HK2-1/2/fa5127d8b142184b41c3abd7ecb8968d
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 11-12 (December)
Pages: 870-877

as in new window
Handle: RePEc:eee:pubeco:v:94:y:2010:i:11-12:p:870-877

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Sick pay Sick leave Experiment Gift exchange;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(522), pages 1025-1050, 07.
  2. Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004. "How Robust is Laboratory Gift Exchange?," Experimental Economics, Springer, Springer, vol. 7(2), pages 189-205, 06.
  3. Magnus Henrekson & Mats Persson, 2004. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 22(1), pages 87-114, January.
  4. Fehr, Ernst & Klein, Alexander & Schmidt, Klaus M., 2005. "Fairness and Contract Design," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 67, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1997. "Reciprocity as a contract enforcement device: experimental evidence," ULB Institutional Repository 2013/5911, ULB -- Universite Libre de Bruxelles.
  6. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
  7. McCabe, Kevin A. & Rigdon, Mary L. & Smith, Vernon L., 2003. "Positive reciprocity and intentions in trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 267-275, October.
  8. Duersch, Peter & Oechssler, Jörg & Vadovic, Radovan, 2012. "Sick pay provision in experimental labor markets," European Economic Review, Elsevier, vol. 56(1), pages 1-19.
  9. Engelmann, Dirk & Kübler, Dorothea, 2007. "Do Legal Standards Affect Ethical Concerns of Consumers?," IZA Discussion Papers 3266, Institute for the Study of Labor (IZA).
  10. Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(2), pages 437-59, May.
  11. R. Lynn Hannan & John H. Kagel & Donald V. Moser, 2002. "Partial Gift Exchange in an Experimental Labor Market: Impact of Subject Population Differences, Productivity Differences, and Effort Requests on Behavior," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 20(4), pages 923-951, October.
  12. Barmby, Tim A. & Ercolani, Marco G. & Treble, John G., 2000. "Sickness Absence: An International Comparison," IRISS Working Paper Series, IRISS at CEPS/INSTEAD 2000-03, IRISS at CEPS/INSTEAD.
  13. Jody Heymann & Hye Jin Rho & John Schmitt & Alison Earle, 2009. "Contagion Nation: A Comparison of Paid Sick Day Policies in 22 Countries," CEPR Reports and Issue Briefs, Center for Economic and Policy Research (CEPR) 2009-19, Center for Economic and Policy Research (CEPR).
  14. Owens, Mark F. & Kagel, John H., 2010. "Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 317-326, March.
  15. Fehr, Ernst, et al, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 16(2), pages 324-51, April.
  16. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1644-1655, December.
  17. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  18. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(497), pages 684-708, 07.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Antonio FILIPPIN & Paolo CROSETTO, 2014. "A Reconsideration of Gender Differences in Risk Attitudes," Departmental Working Papers, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano 2014-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  2. Peter Dürsch & Jörg Oechssler & Radovan Vadovic, 2008. "Sick Pay Provision in Experimental Labor Markets," Working Papers 0476, University of Heidelberg, Department of Economics, revised Oct 2008.
  3. Charness, Gary & Kuhn, Peter J., 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," IZA Discussion Papers 4941, Institute for the Study of Labor (IZA).
  4. Ziebarth, Nicolas R., 2013. "Long-term absenteeism and moral hazard—Evidence from a natural experiment," Labour Economics, Elsevier, vol. 24(C), pages 277-292.
  5. Charness, Gary & Du, Ninghua & Yang, Chun-Lei & Yao, Lan, 2013. "Promises in contract design," European Economic Review, Elsevier, vol. 64(C), pages 194-208.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:94:y:2010:i:11-12:p:870-877. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.