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The Pros and Cons of Sick Pay Schemes: A Method to Test for Contagious Presenteeism and Shirking Behavior

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  • Pichler, Stefan
  • Ziebarth, Nicolas R.

Abstract

This paper proposes a test for the existence and the degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior. Then we derive testable conditions for reduced shirking, increased presenteeism, and the level of overall moral hazard when benefits are cut. We implement the test empirically exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. The labor supply adjustment for contagious diseases is significantly smaller than for non-contagious diseases, providing evidence for contagious presenteeism and negative externalities which arise in form of infections.

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  • Pichler, Stefan & Ziebarth, Nicolas R., 2015. "The Pros and Cons of Sick Pay Schemes: A Method to Test for Contagious Presenteeism and Shirking Behavior," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112940, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc15:112940
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    Cited by:

    1. Ahn, Thomas & Yelowitz, Aaron, 2016. "Paid Sick Leave and Absenteeism: The First Evidence from the U.S," MPRA Paper 69794, University Library of Munich, Germany.
    2. Carlo Alberto Biscardo & Alessandro Bucciol & Paolo Pertile, 2015. "Who should monitor job sick leave?," Working Papers 18/2015, University of Verona, Department of Economics.
    3. Boris HirschBy & Daniel S. J. Lechmann & Claus Schnabel, 2017. "Coming to work while sick: an economic theory of presenteeism with an application to German data," Oxford Economic Papers, Oxford University Press, vol. 69(4), pages 1010-1031.
    4. 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.

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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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