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A natural experiment on sick pay cuts, sickness absence, and labor costs

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  • Ziebarth, Nicolas R.
  • Karlsson, Martin

Abstract

This study estimates the reform effects of a reduction in statutory sick pay levels on various outcome dimensions. A federal law reduced the legal obligation of German employers to provide 100 percent continued wages for up to six weeks per sickness episode to 80 percent. This measure increased the ratio of employees having no days of absence by about 7.5 percent. The mean number of absence days per year decreased by about 5 percent. The reform might have reduced total labor costs by about e1.5 billion per year which might have led to the creation of around 50,000 new jobs.
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Suggested Citation

  • Ziebarth, Nicolas R. & Karlsson, Martin, 2010. "A natural experiment on sick pay cuts, sickness absence, and labor costs," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 46768, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:46768
    DOI: 10.1016/j.jpubeco.2010.09.001
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/46768/
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    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • 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

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