IDEAS home Printed from https://ideas.repec.org/p/use/tkiwps/0527.html
   My bibliography  Save this paper

Do Financial Bonuses to Employees Reduce their Absenteeism? Outcome of a Lottery

Author

Listed:
  • W.H.J. Hassink
  • P. Koning

Abstract

This paper investigates the effectiveness of a monthly lottery in reducing sick leave among workers in a manufacturing firm. Conditions of participation are not having reported sick in the previous three months and not having won the lottery earlier. It turns out that the lottery results in a decrease in the rate of sick leave of 1.6 percentage point. From the perspective of the firm, the lottery is found to be highly beneficial – that is, the benefits associated with the decrease in the sick leave rate exceed the costs of the lottery. Workers seem to be primarily driven by the first upcoming lottery. After winning the lottery, winners resume their previous (rate of) absence.

Suggested Citation

  • W.H.J. Hassink & P. Koning, 2005. "Do Financial Bonuses to Employees Reduce their Absenteeism? Outcome of a Lottery," Working Papers 05-27, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:0527
    as

    Download full text from publisher

    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/309948/05_27.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Engellandt, Axel & Riphahn, Regina T., 2004. "Incentive Effects of Bonus Payments: Evidence from an International Company," IZA Discussion Papers 1229, Institute of Labor Economics (IZA).
    2. Johansson, Per & Palme, Marten, 1996. "Do economic incentives affect work absence? Empirical evidence using Swedish micro data," Journal of Public Economics, Elsevier, vol. 59(2), pages 195-218, February.
    3. Ichino, Andrea & Riphahn, Regina T., 2001. "The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation," IZA Discussion Papers 385, Institute of Labor Economics (IZA).
    4. Barmby, T A & Orme, C D & Treble, John G, 1991. "Worker Absenteeism: An Analysis Using Microdata," Economic Journal, Royal Economic Society, vol. 101(405), pages 214-229, March.
    5. Barmby, Tim & Orme, Chris & Treble, John, 1995. "Worker absence histories: a panel data study," Labour Economics, Elsevier, vol. 2(1), pages 53-65, March.
    6. Tim A. Barmby & Marco G. Ercolani & John G. Treble, 2002. "Sickness Absence: An International Comparison," Economic Journal, Royal Economic Society, vol. 112(480), pages 315-331, June.
    7. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    8. Rainer Winkelmann, 1999. "Wages, firm size and absenteeism," Applied Economics Letters, Taylor & Francis Journals, vol. 6(6), pages 337-341.
    9. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    10. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    11. Doherty, N A, 1979. "National Insurance and Absence from Work," Economic Journal, Royal Economic Society, vol. 89(353), pages 50-65, March.
    12. Per Johansson & Mårten Palme, 2002. "Assessing the Effect of Public Policy on Worker Absenteeism," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 381-409.
    13. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    14. Kenyon, Peter & Dawkins, Peter, 1989. "A Time Series Analysis of Labour Absence in Australia," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 232-239, May.
    15. 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, vol. 22(1), pages 87-114, January.
    16. Dunn, L F & Youngblood, Stuart A, 1986. "Absenteeism as a Mechanism for Approaching an Optimal Labor Market Equilibrium: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 668-674, November.
    17. Nicholas Wilson & Michael J. Peel, 1991. "The Impact on Absenteeism and Quits of Profit-Sharing and other Forms of Employee Participation," ILR Review, Cornell University, ILR School, vol. 44(3), pages 454-468, April.
    18. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    19. Leigh, J. Paul, 1985. "The effects of unemployment and the business cycle on absenteeism," Journal of Economics and Business, Elsevier, vol. 37(2), pages 159-170, May.
    20. Robert Drago & Mark Wooden, 1992. "The Determinants of Labor Absence: Economic Factors and Workgroup Norms across Countries," ILR Review, Cornell University, ILR School, vol. 45(4), pages 764-778, July.
    21. Allen, Steven G, 1981. "An Empirical Model of Work Attendance," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 77-87, February.
    22. Kaivanto, Kim, 1997. "An alternative model of pro-cyclical absenteeism," Economics Letters, Elsevier, vol. 54(1), pages 29-34, January.
    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


    Cited by:

    1. De Paola, Maria, 2010. "Absenteeism and peer interaction effects: Evidence from an Italian Public Institute," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 420-428, June.
    2. Wolter H.J. Hassink & Pierre Koning, 2009. "Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery," ILR Review, Cornell University, ILR School, vol. 62(3), pages 327-342, April.
    3. Konstantinos, Pouliakas & Ioannis, Theodossiou, 2010. "An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work," MPRA Paper 20336, University Library of Munich, Germany.
    4. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Performance Pay as an Incentive for Lower Absence Rates in Britain," MPRA Paper 18238, University Library of Munich, Germany.
    5. Konstantinos Pouliakas & Nikolaos Theodoropoulos, 2012. "The Effect of Variable Pay Schemes on Workplace Absenteeism," Research in Labor Economics, in: Research in Labor Economics, pages 109-157, Emerald Group Publishing Limited.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2010. "An Inquiry Into The Theory, Causes And Consequences Of Monitoring Indicators Of Health And Safety At Work," SIRE Discussion Papers 2010-120, Scottish Institute for Research in Economics (SIRE).
    2. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Performance Pay as an Incentive for Lower Absence Rates in Britain," MPRA Paper 18238, University Library of Munich, Germany.
    3. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    4. De Paola, Maria, 2010. "Absenteeism and peer interaction effects: Evidence from an Italian Public Institute," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 420-428, June.
    5. Georges Dionne & Benoit Dostie, 2007. "New Evidence on the Determinants of Absenteeism Using Linked Employer-Employee Data," ILR Review, Cornell University, ILR School, vol. 61(1), pages 108-120, October.
    6. Lusine Lusinyan & Leo Bonato, 2007. "Work Absence in Europe," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 475-538, July.
    7. Per Engström & Bertil Holmlund, 2007. "Worker Absenteeism in Search Equilibrium," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 439-467, September.
    8. Moral De Blas, Alfonso & Corrales-Herrero, Helena & Martín-Román, Ángel, 2012. "Glass Ceiling or Slippery Floors? Understanding Gender Differences in the Spanish Worker’s Compensation System/¿Techo de cristal o suelo resbaladizo? Comprendiendo las diferencias de género en el sist," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 311-340, Abril.
    9. Andrén, Daniela, 2001. "Short-Term Absenteeism Due To Sickness: The Swedish Experience, 1986 - 1991," Working Papers in Economics 46, University of Gothenburg, Department of Economics.
    10. Bratberg, Espen & Monstad, Karin, 2015. "Worried sick? Worker responses to a financial shock," Labour Economics, Elsevier, vol. 33(C), pages 111-120.
    11. Bertil Holmlund, 2004. "Sickness Absence and Search Unemployment," CESifo Working Paper Series 1227, CESifo.
    12. García-Serrano, Carlos & Malo, Miguel A., 2009. "The impact of union direct voice on voluntary and involuntary absenteeism," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 372-383, March.
    13. 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, vol. 22(1), pages 87-114, January.
    14. Johansson, Per & Palme, Mårten, 2004. "Moral hazard and sickness insurance: Empirical evidence from a sickness insurance reform in Sweden," Working Paper Series 2004:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    15. Dionne, Georges & Dostie, Benoit, 2005. "New evidence on the determinants of absenteeism using linked employer-employee," Working Papers 05-5, HEC Montreal, Canada Research Chair in Risk Management.
    16. Spierdijk, Laura & van Lomwel, Gijsbert & Peppelman, Wilko, 2009. "The determinants of sick leave durations of Dutch self-employed," Journal of Health Economics, Elsevier, vol. 28(6), pages 1185-1196, December.
    17. Fahr, René & Frick, Bernd, 2007. "On the Inverse Relationship between Unemployment and Absenteeism: Evidence from Natural Experiments and Worker Heterogeneity," IZA Discussion Papers 3171, Institute of Labor Economics (IZA).
    18. International Monetary Fund, 2004. "Sweden: Selected Issues," IMF Staff Country Reports 2004/245, International Monetary Fund.
    19. Maria De Paola & Valeria Pupo & Vincenzo Scoppa, 2009. "Absenteeism In The Italian Public Sector: The Effects Of Changes In Sick Leave Compensation," Working Papers 200916, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    20. Kaiser, Carl P., 1998. "What do we know about employee absence behavior? An interdisciplinary interpretation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(1), pages 79-96.

    More about this item

    Keywords

    absenteeism; sick leave; incentives; lottery;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:use:tkiwps:0527. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marina Muilwijk (email available below). General contact details of provider: https://edirc.repec.org/data/eiruunl.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.