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The Economics of Paid Sick Leave

Author

Listed:
  • Stefan Pichler
  • Christopher Prinz
  • Stefan Thewissen
  • Nicolas R. Ziebarth

Abstract

This article examines the economics of paid sick leave from both theoretical and empirical perspectives. Research on paid sick leave has evolved dynamically over the last decade, primarily driven by the spread of US sick pay mandates, which have increased paid sick leave access from 63 percent to 77 percent in all US jobs. We begin by discussing the economic rationales for government regulation of paid sick leave, particularly the negative externalities associated with contagious diseases when individuals work while sick. After that, we discuss the key trade-offs in the general design of paid sick leave schemes, along with the trade-offs when setting specific policy parameters. Finally, we review economic modeling approaches to study optimal paid sick leave policies.

Suggested Citation

  • Stefan Pichler & Christopher Prinz & Stefan Thewissen & Nicolas R. Ziebarth, 2026. "The Economics of Paid Sick Leave," Journal of Economic Perspectives, American Economic Association, vol. 40(2), pages 215-242, Spring.
    • Handle: RePEc:aea:jecper:v:40:y:2026:i:2:p:215-42
    DOI: 10.1257/jep.20251479
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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