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A Natural Experiment on Sick Pay Cuts, Sickness Absence, and Labor Costs

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  • Nicolas R. Ziebarth
  • Martin Karlsson

Abstract

This study estimates the reform effects of a reduction in statutory sick pay levels on various outcome dimensions. A federal law reduced the legal obligation of German employers to provide 100 percent continued wages for up to six weeks per sickness episode to 80 percent. This measure increased the ratio of employees having no days of absence by about 7.5 percent. The mean number of absence days per year decreased by about 5 percent. The reform might have reduced total labor costs by about €1.5 billion per year which might have led to the creation of around 50,000 new jobs.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.344885.de/diw_sp0244.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 244.

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Length: 37 p.
Date of creation: 2009
Date of revision:
Publication status: Published in: Journal of Public Economics 94 (2010), 11-12, 1108-1122
Handle: RePEc:diw:diwsop:diw_sp244

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References

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  1. Nicolas R. Ziebarth, 2009. "Long-Term Absenteeism and Moral Hazard: Evidence from a Natural Experiment," SOEPpapers on Multidisciplinary Panel Data Research 172, DIW Berlin, The German Socio-Economic Panel (SOEP).
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  7. Nicolas R. Ziebarth & Martin Karlsson, 2009. "The Effects of Expanding the Generosity of the Statutory Sickness Insurance System," SOEPpapers on Multidisciplinary Panel Data Research 245, DIW Berlin, The German Socio-Economic Panel (SOEP).
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  22. Puhani P-A., 2010. "The Treatment Effect, the Cross Difference, and the Interaction Term in Nonlinear “Difference-in-Differences” Models," Working Papers ERMES 1004, ERMES, University Paris 2.
  23. Michael Feil & Sabine Klinger & Gerd Zika, 2008. "Der Beschäftigungseffekt geringerer Sozialabgaben in Deutschland - Wie beeinflusst die Wahl des Simulationsmodells das Ergebnis?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(3), pages 431-460.
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  26. Michele Campolieti, 2004. "Disability Insurance Benefits and Labor Supply: Some Additional Evidence," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 863-890, October.
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