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The pros and cons of sick pay schemes: Testing for contagious presenteeism and noncontagious absenteeism behavior

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  • Pichler, Stefan
  • Ziebarth, Nicolas R.

Abstract

This paper provides an analytical framework and uses data from the U.S. and Germany to test for the existence of contagious presenteeism and negative externalities in sick leave insurance. The first part exploits high-frequency Google Flu data and the staggered implementation of U.S. sick pay mandates to show, using a reduced-form framework, that population-level influenza-like disease rates decrease after employees gain access to paid sick leave. Next, a simple theoretical framework provides evidence on the underlying behavioral labor supply mechanisms. The model theoretically decomposes overall labor supply adjustments (“moral hazard”) into contagious presenteeism and noncontagious absenteeism behavior and derives testable conditions. The last part illustrates how to implement the model exploiting a German sick pay reform and administrative industry-level data on certified sick leave by diagnosis. The empirical test finds that the labor supply elasticity for contagious diseases is significantly smaller than for noncontagious diseases. Under the identifying assumptions of the model, this finding provides additional indirect evidence for the existence of contagious presenteeism.

Suggested Citation

  • Pichler, Stefan & Ziebarth, Nicolas R., 2017. "The pros and cons of sick pay schemes: Testing for contagious presenteeism and noncontagious absenteeism behavior," Journal of Public Economics, Elsevier, vol. 156(C), pages 14-33.
  • Handle: RePEc:eee:pubeco:v:156:y:2017:i:c:p:14-33
    DOI: 10.1016/j.jpubeco.2017.07.003
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    Cited by:

    1. Petri Böckerman & Ohto Kanninen & Ilpo Suoniemi, 2018. "A kink that makes you sick: The effect of sick pay on absence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(4), pages 568-579, June.
    2. Pichler, Stefan & Ziebarth, Nicolas R., 2017. "The pros and cons of sick pay schemes: Testing for contagious presenteeism and noncontagious absenteeism behavior," Journal of Public Economics, Elsevier, vol. 156(C), pages 14-33.
    3. repec:eee:jhecon:v:62:y:2018:i:c:p:60-68 is not listed on IDEAS
    4. Ziebarth, Nicolas R., 2017. "Social Insurance and Health," IZA Discussion Papers 10918, Institute for the Study of Labor (IZA).
    5. Martin Halla & Susanne Pech & Martina Zweimüller, 2017. "The effect of statutory sick-pay on workers' labor supply and subsequent health," Working Papers 2017-04, Faculty of Economics and Statistics, University of Innsbruck.
    6. repec:spr:eujhec:v:19:y:2018:i:8:d:10.1007_s10198-018-0962-6 is not listed on IDEAS
    7. Pichler, Stefan & Ziebarth, Nicolas R., 2016. "Labor Market Effects of US Sick Pay Mandates," IZA Discussion Papers 9867, Institute for the Study of Labor (IZA).
    8. Alex Bryson & Harald Dale-Olsen, 2017. "Does Sick Pay Affect Workplace Absence?," DoQSS Working Papers 17-12, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    9. David Slusky & Richard J. Zeckhauser, 2018. "Sunlight and Protection Against Influenza," NBER Working Papers 24340, National Bureau of Economic Research, Inc.
    10. repec:wfo:wstudy:61487 is not listed on IDEAS

    More about this item

    Keywords

    Sickness insurance; Paid sick leave; Presenteeism; Contagious diseases; Infections; Negative externalities; Absenteeism; U.S.; Germany;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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