Impact of wages and job levels on worker absenteeism

Purpose - This paper seeks to analyse to what extent absolute wage levels, relative wages compared with colleagues, and the position in a firm's hierarchy affect workers' absenteeism behaviour. Design/methodology/approach - The paper uses personnel data of a large German company from January 1999 to December 2005. The data set contains 62,774 monthly observations of 1,187 full‐time white‐collar workers. Probit and Tobit models for individual monthly absenteeism are estimated. Findings - Absenteeism is negatively correlated with absolute wages, relative wages, and hierarchical levels, which is in line with the paper's hypotheses. Moreover, the results indicate that a positive relative wage has a stronger impact than a negative relative wage, which gives rise to the issue of unequal wage structures. Research limitations/implications - The findings point to the relevance of interdependent preferences and status in utility functions. From the non‐linear relationship between relative wages and absenteeism it follows that an unequal wage structure has the benefit that relatively better paid workers are absent less frequenty, while the costs of higher absenteeism of workers at the lower tail of the wage distribution are rather low. Practical implications - The results show that not only the absolute wage level but also status‐related factors (e.g. relative wage, hierarchical level) affect employees' work effort and that unequal wage structures can be efficient to some degree. Originality/value - The paper provides “real world” evidence from scarce personnel data for the importance of interdependent preferences and status. Furthermore, the non‐linear relationship between relative wages and absenteeism is examined.