Firms' Moral Hazard in Sickness Absences
Sick workers in many countries receive sick pay during their illness-related absences from the workplace. In several countries, the social security system insures firms against their workers' sickness absences. However, this insurance may create moral hazard problems for firms, leading to the inefficient monitoring of absences or to an underinvestment in their prevention. In the present paper, we investigate firm' moral hazard problems in sickness absences by analyzing a legislative change that took place in Austria in 2000. In September 2000, an insurance fund that refunded firms for the costs of their blue-collar workers' sickness absences was abolished (firms did not receive a similar refund for their white-collar workers' sickness absences). Before that time, small firms were fully refunded for the wage costs of blue-collar workers' sickness absences. Large firms, by contrast, were refunded only 70% of the wages paid to sick blue-collar workers. Using a difference-in-differences-in-differences approach, we estimate the causal impact of refunding firms for their workers' sickness absences. Our results indicate that the incidences of blue-collar workers' sicknesses dropped by approximately 8% and sickness absences were almost 11% shorter following the removal of the refund. Several robustness checks confirm these results.
|Date of creation:||Oct 2011|
|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|
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.:
- 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.
- Stephen Nickell & D. Nicolitsas, 1994.
LSE Research Online Documents on Economics
51644, London School of Economics and Political Science, LSE Library.
- Barmby, Tim & Stephan, Gesine, 2000. "Worker Absenteeism: Why Firm Size May Matter," Manchester School, University of Manchester, vol. 68(5), pages 568-577, September.
- Elisabeth Fevang & Simen Markussen & Knut Røed, 2014.
"The Sick Pay Trap,"
Journal of Labor Economics,
University of Chicago Press, vol. 32(2), pages 305 - 336.
- Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
- Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009.
"Austrian Social Security Database,"
NRN working papers
2009-03, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
- Eva Kislingerová, 2011. "Předmluva," Ekonomika a Management, University of Economics, Prague, vol. 2011(4), pages 4-4.
- Leo Bonato & Lusine Lusinyan, 2004.
"Work Absence in Europe,"
IMF Working Papers
04/193, International Monetary Fund.
- Emilia Del Bono & Andrea Weber, 2008.
"Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria,"
Journal of Labor Economics,
University of Chicago Press, vol. 26, pages 181-221.
- Del Bono, Emilia & Weber, Andrea, 2006. "Do wages compensate for anticipated working time restrictions? Evidence from seasonal employment in Austria," ISER Working Paper Series 2006-37, Institute for Social and Economic Research.
- Del Bono, Emilia & Weber, Andrea, 2006. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," IZA Discussion Papers 2242, Institute for the Study of Labor (IZA).
- Markussen, Simen & Mykletun, Arnstein & Røed, Knut, 2010. "The Case for Presenteeism," IZA Discussion Papers 5343, Institute for the Study of Labor (IZA).
- Barmby, Tim A. & Ercolani, Marco G. & Treble, John G., 2000.
"Sickness Absence: An International Comparison,"
IRISS Working Paper Series
2000-03, IRISS at CEPS/INSTEAD.
- Brown, Sarah & Sessions, John G, 1996. " The Economics of Absence: Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 10(1), pages 23-53, March.
- Barmby, Tim & Sessions, John G & Treble, John G, 1994. " Absenteeism, Efficiency Wages and Shirking," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(4), pages 561-66.
- David Rae, 2005. "How to Reduce Sickness Absences in Sweden: Lessons from International Experience," OECD Economics Department Working Papers 442, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6005. 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.