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 in an experimental labor market that is rich enough to allow for moral hazard, adverse selection, and crowding out of good intentions to occur. We find that higher sick pay is reciprocated by workers through higher effort but only if sick pay is not mandated. We also study adverse selection effects when workers have different probabilities of getting sick and can reject the hypothesis that this leads to market breakdown. Overall, we find that mandating sick pay actually leads to a higher voluntary provision of sick pay by ?rms.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-076.
Date of creation: 25 Sep 2009
Date of revision:
sick pay; sick leave; experiment; gift exchange;
Other versions of this item:
- Bauernschuster, Stefan & Duersch, Peter & Oechssler, Jörg & Vadovic, Radovan, 2010. "Mandatory sick pay provision: A labor market experiment," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 870-877, December.
- 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.
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-10 (All new papers)
- NEP-CBE-2009-10-10 (Cognitive & Behavioural Economics)
- NEP-CTA-2009-10-10 (Contract Theory & Applications)
- NEP-EXP-2009-10-10 (Experimental Economics)
- NEP-HEA-2009-10-10 (Health Economics)
- NEP-LAB-2009-10-10 (Labour Economics)
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