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Dismissal protection and long-term sickness absence: First evidence from Germany

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  • Gürtzgen, Nicole
  • Hiesinger, Karolin

Abstract

This paper analyses the causal effects of weaker dismissal protection on the incidence of long-term sickness (> six weeks). We exploit a German policy change, which shifted the threshold exempting small establishments from dismissal protection from five to ten workers. Using administrative data, we find a significantly negative reform effect on transitions into long-term sickness in the second year after a worker has entered an establishment. This response is due to a behavioural, rather than a compositional effect and is particularly pronounced among medium-skilled males. Our results further indicate that the reform did not alter the probability of involuntary unemployment after sickness.

Suggested Citation

  • Gürtzgen, Nicole & Hiesinger, Karolin, 2020. "Dismissal protection and long-term sickness absence: First evidence from Germany," ZEW Discussion Papers 20-040, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:20040
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    References listed on IDEAS

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    More about this item

    Keywords

    dismissal protection; long-term sickness; involuntary unemployment; difference-in-differences; administrative data; small establishments;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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