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Benefit Morale and Cross-Country Diversity in Sick Pay Entitlements

  • Daniel Arnold

    ()

    (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

This paper analyzes the impact of a country’s level of benefit morale on generosity of sick pay entitlements by means of a political economy model and an empirical investigation. Higher benefit morale reduces the incidence of absence. On the one hand, this makes insurance cheaper with the usual demand side reaction. On the other hand, being absent less often, the voter prefers less insurance. The former effect dominates at lower, the latter at higher levels of benefit morale. We present empirical evidence for both effects in a sample of 31 countries between 1981 and 2010.

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File URL: http://www.iaaeg.de/images/DiscussionPaper/2012_11.pdf
File Function: First version, 2012
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Paper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEU Discussion Papers with number 201211.

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Date of creation: Dec 2012
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Handle: RePEc:iaa:dpaper:201211
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  1. Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December.
  2. Muravyev, Alexander, 2010. "Evolution of Employment Protection Legislation in the USSR, CIS and Baltic States, 1985-2009," IZA Discussion Papers 5365, Institute for the Study of Labor (IZA).
  3. Puhani, Patrick A. & Sonderhof, Katja, 2009. "The Effects of a Sick Pay Reform on Absence and on Health-Related Outcomes," IZA Discussion Papers 4607, Institute for the Study of Labor (IZA).
  4. Algan, Yann & Cahuc, Pierre & Sangnier, Marc, 2011. "Efficient and Inefficient Welfare States," CEPR Discussion Papers 8229, C.E.P.R. Discussion Papers.
  5. Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
  6. Halla, Martin & Lackner, Mario & Schneider, Friedrich, 2009. "An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale," IZA Discussion Papers 4165, Institute for the Study of Labor (IZA).
  7. Assar Lindbeck & Sten Nyberg & Jörgen W. Weibull, 2003. "Social Norms and Welfare State Dynamics," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 533-542, 04/05.
  8. Ziebarth N & Karlsson M, 2009. "A Natural Experiment on Sick Pay Cuts, Sickness Absence, and Labor Costs," Health, Econometrics and Data Group (HEDG) Working Papers 09/34, HEDG, c/o Department of Economics, University of York.
  9. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  10. Halla, Martin & Schneider, Friedrich, 2008. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," IZA Discussion Papers 3536, Institute for the Study of Labor (IZA).
  11. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  12. James Feyrer, 2009. "The US Productivity Slowdown, the Baby Boom, and Management Quality," NBER Working Papers 15474, National Bureau of Economic Research, Inc.
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