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The Economics of Paid Sick Leave

Author

Listed:
  • Pichler, Stefan

    (University of Groningen)

  • Prinz, Christopher

    (OECD)

  • Thewissen, Stefan

    (Nyenrode Business University)

  • Ziebarth, Nicolas

    (Center for European Economic Research (ZEW Mannheim) & University of Mannheim)

Abstract

This article examines the economics of paid sick leave from both theoretical and empirical perspectives. Research on paid sick leave has evolved dynamically over the last decade, primarily driven by the spread of U.S. sick pay mandates, which have increased paid sick leave access from 63 percent to 77 percent in all U.S. jobs. We begin by discussing the economic rationales for government regulation of paid sick leave, particularly the negative externalities associated with contagious diseases when individuals work while sick. After that, we discuss the key trade-offs in the general design of paid sick leave schemes, along with the trade-offs when setting specific policy parameters. Finally, we review economic modeling approaches to study optimal paid sick leave policies.

Suggested Citation

  • Pichler, Stefan & Prinz, Christopher & Thewissen, Stefan & Ziebarth, Nicolas, 2026. "The Economics of Paid Sick Leave," IZA Discussion Papers 18853, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18853
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    Keywords

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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • 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
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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