Absenteeism and productivity: an experience-rating adjustment scheme applied to health insurance in France

In this paper, we analyze the effects of introducing an experience-rating adjustment scheme on employer’s contributions to health insurance. To this end, we develop a search and matching model in a segmented labor market. In the segment with higher-risk jobs, sick leaves are more frequent and thereby average productivity is lower. The model is calibrated to the French economy. Results from the simulations show that the experience-rating policy slightly improves productivity and employment. In quantitative terms, a 1 % variation in the experience-rating rate induces a 0.48 % reduction in the unemployment spell, a 1.07 % reduction in the days of absence, and a 0.1 % increase in productivity. Finally, this policy also leads to a slightly better economic performance compared to health insurance privatization.