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A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence

Author

Listed:
  • Petri Böckerman

    (Palkansaajien tutkimuslaitos)

  • Ohto Kanninen

    (Palkansaajien tutkimuslaitos)

  • Ilpo Suoniemi

    (Palkansaajien tutkimuslaitos)

Abstract

This paper examines the effect of the replacement rule of the Finnish sickness insurance system on the duration of sickness absence. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the effect using a regression kink design. We find a substantial and robust behavioral response. The statistically significant point estimate of the elasticity of the duration of sickness absence with respect to the replacement rate is on the order of 1.4.

Suggested Citation

  • Petri Böckerman & Ohto Kanninen & Ilpo Suoniemi, 2014. "A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence," Working Papers 292, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    • Handle: RePEc:pst:wpaper:292
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    Cited by:

    1. Alex Bryson & Harald Dale-Olsen, 2017. "Does Sick Pay Affect Workplace Absence?," DoQSS Working Papers 17-12, Quantitative Social Science - UCL Social Research Institute, University College London.
    2. Olivier Marie & Judit Vall Castello, 2020. "If sick-leave becomes more costly, will I go back to work? Could it be too soon?," Working Papers 2020/09, Institut d'Economia de Barcelona (IEB).
    3. Ganong, Peter & Jäger, Simon, 2014. "A Permutation Test and Estimation Alternatives for the Regression Kink Design," IZA Discussion Papers 8282, Institute of Labor Economics (IZA).
    4. Ratnikova, Tatiana & Kopytok, Vitovt, 2019. "The effects of compulsory military service on income and wages in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 55, pages 51-72.
    5. Stijn Baert & Bas van der Klaauw & Gijsbert van Lomwel, 2018. "The effectiveness of medical and vocational interventions for reducing sick leave of self‐employed workers," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 139-152, February.

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    More about this item

    Keywords

    Sick pay; labor supply; sickness absence; paid sick leave; regression kink design;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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