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A kink that makes you sick: The effect of sick pay on absence

Author

Listed:
  • Petri Böckerman
  • Ohto Kanninen
  • Ilpo Suoniemi

Abstract

We exploit a regression kink design to estimate the elasticity of the duration of sickness absence with respect to replacement rate. Elasticity is a central parameter in defining the optimal social insurance scheme compensating for lost earnings due to sickness. We use comprehensive administrative data and a kink in the policy rule near the median earnings. We find a statistically significant estimate of the elasticity of the order of one.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:japmet:v:33:y:2018:i:4:p:568-579
    DOI: 10.1002/jae.2620
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    Cited by:

    1. Boeri, Tito & Di Porto, Edoardo & Naticchioni, Paolo & Scrutinio, Vincenzo, 2021. "Friday Morning Fever. Evidence from a Randomized Experiment on Sick Leave Monitoring in the Public Sector," CEPR Discussion Papers 16104, C.E.P.R. Discussion Papers.
    2. Petri Bockerman & Mika Haapanen & Christopher Jepsen, 2021. "Dark Passage: Mental Health Consequences of Parental Death," Working Papers 202107, Geary Institute, University College Dublin.
    3. Christopher J. Cronin & Matthew C. Harris & Nicolas R. Ziebarth, 2022. "The Anatomy of U.S. Sick Leave Schemes: Evidence from Public School Teachers," NBER Working Papers 29956, National Bureau of Economic Research, Inc.
    4. Svetlana Solovieva & Karina Undem & Daniel Falkstedt & Gun Johansson & Petter Kristensen & Jacob Pedersen & Eira Viikari-Juntura & Taina Leinonen & Ingrid Sivesind Mehlum, 2022. "Utilizing a Nordic Crosswalk for Occupational Coding in an Analysis on Occupation-Specific Prolonged Sickness Absence among 7 Million Employees in Denmark, Finland, Norway and Sweden," IJERPH, MDPI, vol. 19(23), pages 1-24, November.
    5. Alpino, Matteo & Hauge, Karen Evelyn & Kotsadam, Andreas & Markussen, Simen, 2022. "Effects of dialogue meetings on sickness absence—Evidence from a large field experiment," Journal of Health Economics, Elsevier, vol. 83(C).
    6. Øystein Hernæs, 2021. "Going Through Hell: Increased Work Effort in the Aftermath of Terrorism in Norway," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 216-237, January.
    7. Vaalavuo, Maria, 2021. "The unequal impact of ill health: Earnings, employment, and mental health among breast cancer survivors in Finland," Labour Economics, Elsevier, vol. 69(C).
    8. Olivier Marie & Judit Vall Castello, 2020. "If sick-leave becomes more costly, will I go back to work? Could it be too soon?," Working Papers 2020/09, Institut d'Economia de Barcelona (IEB).
    9. Kyyrä, Tomi & Paukkeri, Tuuli, 2018. "Does experience rating reduce sickness and disability claims? Evidence from policy kinks," Journal of Health Economics, Elsevier, vol. 61(C), pages 178-192.
    10. Liepmann, Hannah & Pignatti, Clemente, 2024. "Welfare effects of unemployment benefits when informality is high," Journal of Public Economics, Elsevier, vol. 229(C).
    11. Blanchard, Pablo & Burdin, Gabriel & Dean, Andrés, 2025. "Property rights, sick pay and effort supply," Journal of Development Economics, Elsevier, vol. 177(C).
    12. Cronin, C.J.; & Harris, M. C.; & Ziebarth, N. R.;, 2024. "The Anatomy of U.S. Sick Leave Schemes:Evidence from Public School Teachers," Health, Econometrics and Data Group (HEDG) Working Papers 24/10, HEDG, c/o Department of Economics, University of York.
    13. Guida Ayza Estopa, 2024. "Return-to-work policies for disability insurance recipients: The role of financial incentives," French Stata Users' Group Meetings 2024 17, Stata Users Group.
    14. Menezes-Filho, Naercio & Politi, Ricardo, 2020. "Estimating the causal effects of private health insurance in Brazil: Evidence from a regression kink design," Social Science & Medicine, Elsevier, vol. 264(C).
    15. Petri Böckerman & Ohto Kanninen & Ilpo Suoniemi, 2022. "Income-well-being gradient in sickness and health," Working Papers 335, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    16. Nathalie Havet & Morgane Plantier, 2023. "The links between difficult working conditions and sickness absences in the case of French workers," LABOUR, CEIS, vol. 37(1), pages 160-195, March.
    17. Márton Csilalg & Lili Márk, 2023. "The Incentive Effects of Sickness Benefit for the Unemployed – Analysis of a Reduction in Potential Benefit Duration," CERS-IE WORKING PAPERS 2317, Institute of Economics, Centre for Economic and Regional Studies.
    18. Tatiana Ratnikova & Vitovt Kopytok, 2019. "The effects of compulsory military service on income and wages in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 55, pages 51-72.
    19. Maczulskij, Terhi & Haapanen, Mika & Kauhanen, Antti & Riukula, Krista, 2024. "Decentralized wage bargaining and health," Economics & Human Biology, Elsevier, vol. 55(C).
    20. David S. Lee & Pauline Leung & Christopher J. O’Leary & Zhuan Pei & Simon Quach, 2021. "Are Sufficient Statistics Necessary? Nonparametric Measurement of Deadweight Loss from Unemployment Insurance," Journal of Labor Economics, University of Chicago Press, vol. 39(S2), pages 455-506.
    21. Olivier Marie & Judit Vall Castelló, 2023. "Sick Leave Cuts and (Unhealthy) Returns to Work," Journal of Labor Economics, University of Chicago Press, vol. 41(4), pages 923-956.
    22. Antti Saastamoinen & Mika Kortelainen, 2020. "When Does Money Stick in Education? Evidence from A Kinked Grant Rule," Education Finance and Policy, MIT Press, vol. 15(4), pages 708-735, Fall.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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