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The Effects of a Sick Pay Reform on Absence and on Health-Related Outcomes

  • Puhani, Patrick A.

    ()

    (Leibniz University of Hannover)

  • Sonderhof, Katja

    ()

    (Leibniz University of Hannover)

We evaluate the effects of a reduction in sick pay from 100 to 80% of the wage. Unlike previous literature, apart from absence from work, we also consider effects on doctor/hospital visits and subjective health indicators. We also add to the literature by estimating both switch-on and switch-off effects, because the reform was repealed two years later. We find a two-day reduction in the number of days of absence. Quantile regression reveals higher point estimates (both in absolute and relative terms) at higher quantiles, meaning that the reform predominantly reduced long durations of absence. In terms of health, the reform reduced the average number of days spent in hospital by almost half a day, but we cannot find robust evidence for negative effects on health outcomes or perceived liquidity constraints.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4607.

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Length: 54 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published in: Journal of Health Economics, 2010, 29 (2), 285-302
Handle: RePEc:iza:izadps:dp4607
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  1. Dolan, Paul, 2000. "The measurement of health-related quality of life for use in resource allocation decisions in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 32, pages 1723-1760 Elsevier.
  2. Patrick A. Puhani & Katja Sonderhof, 2009. "The Effects of a Sick Pay Reform on Absence and on Health-Related Outcomes," SOEPpapers on Multidisciplinary Panel Data Research 248, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
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  5. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
  6. Riphahn, Regina T., 2004. "Employment protection and effort among German employees," Economics Letters, Elsevier, vol. 85(3), pages 353-357, December.
  7. Groot, Wim, 2000. "Adaptation and scale of reference bias in self-assessments of quality of life," Journal of Health Economics, Elsevier, vol. 19(3), pages 403-420, May.
  8. Dürsch, Peter & Oechssler, Jörg & Vadovic, Radovan, 2008. "Sick Pay Provision in Experimental Labor Markets," Sonderforschungsbereich 504 Publications 08-14, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  9. Susan Athey & Guido W. Imbens, 2002. "Identification and Inference in Nonlinear Difference-In-Differences Models," NBER Technical Working Papers 0280, National Bureau of Economic Research, Inc.
  10. Jonathan Gruber, 1996. "Disability Insurance Benefits and Labor Supply," NBER Working Papers 5866, National Bureau of Economic Research, Inc.
  11. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
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  13. Rigmar Osterkamp, 2002. "Work Lost Due to Illness - an International Comparison," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 3(4), pages 36-40, 02.
  14. Frank Neuhauser & Steven Raphael, 2004. "The Effect of an Increase in Worker's Compensation Benefits on the Duration and Frequency of Benefit Receipt," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 288-302, February.
  15. Andrea Ichino & Regina T. Riphahn, 2005. "The Effect of Employment Protection on Worker Effort: Absenteeism During and After Probation," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 120-143, 03.
  16. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
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  19. Song, Jae G. & Manchester, Joyce, 2007. "New evidence on earnings and benefit claims following changes in the retirement earnings test in 2000," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 669-700, April.
  20. Michele Campolieti, 2004. "Disability Insurance Benefits and Labor Supply: Some Additional Evidence," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 863-890, October.
  21. repec:cup:cbooks:9780521845731 is not listed on IDEAS
  22. Peter AUER & Sandrine CAZES, 2000. "The resilience of the long-term employment relationship: Evidence from the industrialized countries," International Labour Review, International Labour Organization, vol. 139(4), pages 379-408, December.
  23. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
  24. Rainer Winkelmann, 1999. "Wages, firm size and absenteeism," Applied Economics Letters, Taylor & Francis Journals, vol. 6(6), pages 337-341.
  25. Johnson, William G & Ondrich, Jan, 1990. "The Duration of Post-injury Absences from Work," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 578-86, November.
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