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Effect of Long-Term Absenteeism on the Operating Revenues, Productivity, and Employment of Enterprises

Author

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  • Jarle Aarstad

    (The Mohn Centre for Innovation and Regional Development, Western Norway University of Applied Sciences, 5063 Bergen, Norway)

  • Olav Andreas Kvitastein

    (The Mohn Centre for Innovation and Regional Development, Western Norway University of Applied Sciences, 5063 Bergen, Norway)

Abstract

(1) Background: Previous studies have shown that absenteeism is negatively associated with employee-level performance, but we do not know how exactly absenteeism affects enterprise-level performance. To bridge this knowledge gap, we investigate how average long-term absenteeism affects Norwegian enterprises’ operating revenues and productivity. Also, we investigate if absenteeism decreases employment and whether operating revenues mediate the association. (2) Methods: We performed an enterprise-level dynamic unconditional quasi-maximum likelihood fixed-effects panel regression. (3) Results: The average share of long-term absenteeism nonlinearly decreases operating revenues and overall productivity at an increasing rate. The nonlinear effect may indicate deteriorating value creation among the share of employees largely not absent, but their productivity actually increases at an increasing rate. Thus, the overall findings indicate that the least productive employees first tend to opt out of the workforce, and as absenteeism increases, those subsequently opting out are otherwise increasingly productive. In parallel, those remaining in the workforce are increasingly productive. Absenteeism, moreover, decreases employment the following year, which is partly explained by revenue losses. However, enterprises cut their workforce due to factors beyond the impact of absenteeism on revenues.

Suggested Citation

  • Jarle Aarstad & Olav Andreas Kvitastein, 2023. "Effect of Long-Term Absenteeism on the Operating Revenues, Productivity, and Employment of Enterprises," Administrative Sciences, MDPI, vol. 13(6), pages 1-10, June.
  • Handle: RePEc:gam:jadmsc:v:13:y:2023:i:6:p:156-:d:1174161
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    References listed on IDEAS

    as
    1. Jarle Aarstad & Olav Andreas Kvitastein & Marte C. W. Solheim, 2021. "External shocks and enterprises' dynamic capabilities in a time of regional distress," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2342-2363, December.
    2. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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