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On the Inverse Relationship between Unemployment and Absenteeism: Evidence from Natural Experiments and Worker Heterogeneity

Author

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  • Fahr, René

    (University of Paderborn)

  • Frick, Bernd

    (University of Paderborn)

Abstract

Although an inverse relationship between sickness absence and unemployment has been documented in a number of studies using either quarterly or annual data from different countries with varying institutional frameworks, it is not yet clear whether this empirical regularity is due to changes in the individual costs of absence when unemployment increases (incentive effect) or, alternatively, to changes in the composition of the workforce over the business cycle (selection effect). In order to provide evidence to evaluate the relative importance of both effects we first investigate the effects of changes in the unemployment benefit entitlement system with monthly absence data for East and West Germany for the years 1991-2004. Second, we analyze the impact of differences in the costs of unemployment on the annual absence rates of workers in different sickness insurance funds using state-level annual absence rates for the years 1993-2004. We find clear evidence in favor of an incentive effect.

Suggested Citation

  • Fahr, René & Frick, Bernd, 2007. "On the Inverse Relationship between Unemployment and Absenteeism: Evidence from Natural Experiments and Worker Heterogeneity," IZA Discussion Papers 3171, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp3171
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    References listed on IDEAS

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    Cited by:

    1. Thomas Leoni, 2011. "Fehlzeitenreport 2011. Krankheits- und unfallbedingte Fehlzeiten in Österreich," WIFO Studies, WIFO, number 42691.
    2. Mohamed Ali Ben Halima & Thierry Debrand & Camille Regaert, 2012. "Sick Leaves: Understanding Disparities Between French Departments," Working Papers DT50, IRDES institut for research and information in health economics, revised Oct 2012.
    3. Vincenzo Scoppa & Daniela Vuri, 2014. "Absenteeism, unemployment and employment protection legislation: evidence from Italy," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.
    4. Catalina Amuedo-Dorantes & Cristina Borra, 2013. "On the differential impact of the recent economic downturn on work safety by nativity: the Spanish experience," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-26, December.
    5. Stefan Pichler, 2015. "Sickness Absence, Moral Hazard, and the Business Cycle," Health Economics, John Wiley & Sons, Ltd., vol. 24(6), pages 692-710, June.
    6. Mohamed Ali Ben Halima & Thierry Debrand & Camille Regaert, 2011. "Arrêts maladie : comprendre les disparités départementales," Working Papers DT39, IRDES institut for research and information in health economics, revised Feb 2011.
    7. Thomas Leoni, 2015. "Wirkmodell Krankenstand," WIFO Studies, WIFO, number 58579.
    8. Thomas Leoni, 2010. "Fehlzeitenreport 2009. Krankheits- und unfallbedingte Fehlzeiten in Österreich," WIFO Studies, WIFO, number 39561.

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    More about this item

    Keywords

    absenteeism; unemployment; selection effect; incentive effect; natural experiment;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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