The Sick Pay Trap
In most countries, employers are financially responsible for sick pay during an initial period of a worker's absence spell, after which the public insurance system covers the bill. Based on a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that firms' absence costs significantly affect employees' absence behavior. However, by restricting pay liability to the initial period of the absence spell, firms are discouraged from letting long-term sick workers back into work, since they then face the financial risk associated with subsequent relapses. We show that this disincentive effect is statistically and economically significant.
|Date of creation:||Apr 2011|
|Publication status:||published in: Journal of Labor Economics, 2014, 32 (2), 305-336|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Magnus Henrekson & Mats Persson, 2004.
"The Effects on Sick Leave of Changes in the Sickness Insurance System,"
Journal of Labor Economics,
University of Chicago Press, vol. 22(1), pages 87-114, January.
- Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Seminar Papers 697, Stockholm University, Institute for International Economic Studies.
- 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.
- Shavell, Steven & Weiss, Laurence, 1979.
"The Optimal Payment of Unemployment Insurance Benefits over Time,"
Journal of Political Economy,
University of Chicago Press, vol. 87(6), pages 1347-1362, December.
- Steven Shavell & Laurence Weiss, 1978. "The Optimal Payment of Unemployment Insurance Benefits over Time," Cowles Foundation Discussion Papers 503, Cowles Foundation for Research in Economics, Yale University.
- Hesselius, Patrik & Johansson, Per & Nilsson, Peter, 2009.
"Sick of your colleagues' absence?,"
Working Paper Series
2009:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Andrea Ichino & Giovanni Maggi, 1999.
"Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm,"
NBER Working Papers
7415, National Bureau of Economic Research, Inc.
- Andrea Ichino & Giovanni Maggi, 2000. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 1057-1090.
- Ichino, Andrea & Maggi, Giovanni, 2000. "Work Environment And Individual Background: Explaining Regional Shirking Differentials In A Large Italian Firm," CEPR Discussion Papers 2387, C.E.P.R. Discussion Papers.
- Pierre Cahuc & Stéphane Carcillo & André Zylberberg, 2014.
Sciences Po publications
info:hdl:2441/1oclgdahv98, Sciences Po.
- Pierre Cahuc & Stéphane Carcillo & André Zylberberg, 2014. "Labor Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01076752, HAL.
- Simen Markussen, 2012. "The individual cost of sick leave," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1287-1306, October.
- Markussen, Simen & Røed, Knut & Røgeberg, Ole J. & Gaure, Simen, 2011.
"The anatomy of absenteeism,"
Journal of Health Economics,
Elsevier, vol. 30(2), pages 277-292, March.
- Brinch, Christian N., 2007. "Nonparametric Identification Of The Mixed Hazards Model With Time-Varying Covariates," Econometric Theory, Cambridge University Press, vol. 23(02), pages 349-354, April.
- Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
- Bradley, Steve & Green, Colin & Leeves, Gareth, 2007. "Worker absence and shirking: Evidence from matched teacher-school data," Labour Economics, Elsevier, vol. 14(3), pages 319-334, June.
- Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-559, September.
- Richard V. Burkhauser & Maximilian D. Schmeiser & Robert R. Weathers II, 2012. "The Importance of Anti-Discrimination and Workers' Compensation Laws on the Provision of Workplace Accommodations following the Onset of a Disability," ILR Review, Cornell University, ILR School, vol. 65(1), pages 161-180, January.
- Hensvik, Lena & Nilsson, Peter, 2010. "Businesses, buddies and babies: social ties and fertility at work," Working Paper Series 2010:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Jaap H. Abbring & Gerard J. van den Berg, 2003. "The Nonparametric Identification of Treatment Effects in Duration Models," Econometrica, Econometric Society, vol. 71(5), pages 1491-1517, 09.
- Nicolas R. Ziebarth, 2009.
"Long-Term Absenteeism and Moral Hazard: Evidence from a Natural Experiment,"
SOEPpapers on Multidisciplinary Panel Data Research
172, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Ziebarth, Nicolas R., 2013. "Long-term absenteeism and moral hazard—Evidence from a natural experiment," Labour Economics, Elsevier, vol. 24(C), pages 277-292.
- Nicolas R. Ziebarth, 2009. "Long-Term Absenteeism and Moral Hazard: Evidence from a Natural Experiment," Discussion Papers of DIW Berlin 888, DIW Berlin, German Institute for Economic Research.
- Per Pettersson-Lidbom & Peter Skogman Thoursie, 2013. "Temporary Disability Insurance and Labor Supply: Evidence from a Natural Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 485-507, 04.
- Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
- Gaure, Simen & Røed, Knut & Zhang, Tao, 2005.
"Time and Causality: A Monte Carlo Assessment of the Timing-of-Events Approach,"
19/2005, Oslo University, Department of Economics.
- Gaure, Simen & Roed, Knut & Zhang, Tao, 2007. "Time and causality: A Monte Carlo assessment of the timing-of-events approach," Journal of Econometrics, Elsevier, vol. 141(2), pages 1159-1195, December.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5655. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.