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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 We also add to the literature by estimating both switch-on and switch-off effects, because the reform was repealed two years later.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. Jonathan Gruber, 1996. "Disability Insurance Benefits and Labor Supply," NBER Working Papers 5866, National Bureau of Economic Research, Inc.
  2. 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).
  3. Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," SSE/EFI Working Paper Series in Economics and Finance 0444, Stockholm School of Economics, revised 08 Aug 2001.
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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. 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.
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  8. 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.
  9. 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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  15. repec:cup:cbooks:9780521608275 is not listed on IDEAS
  16. 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.
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  19. Rainer Winkelmann, 1999. "Wages, firm size and absenteeism," Applied Economics Letters, Taylor & Francis Journals, vol. 6(6), pages 337-341.
  20. 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.
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  22. 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.
  23. 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.
  24. 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.
  25. 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.
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