A natural experiment on sick pay cuts, sickness absence, and labor costs

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science. Terms of use: Documents inThe decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly. AbstractThis study estimates the reform effects of a reduction in statutory sick pay levels on various outcome dimensions. A federal law reduced the legal obligation of German employers to provide 100 percent continued wages for up to six weeks per sickness episode to 80 percent. This measure increased the ratio of employees having no days of absence by about 7.5 percent. The mean number of absence days per year decreased by about 5 percent. The reform might have reduced total labor costs by about e 1.5 billion per year which might have led to the creation of around 50,000 new jobs.

Long-term sick leave and the impact of a graded return-to-work program: evidence from Germany

“…Various authors analyze financial aspects (e.g. [9,[12][13][14]). They find that an expansion or cut of benefits influences short-term absenteeism but no effect on long-term sickness periods was present.…”

Sickness Absence, Moral Hazard, and the Business Cycle

“…For instance there is empirical evidence that too high sick pay leads to moral hazard and overreporting of sickness (see, for instance, Johansson and Palme, 2005;Puhani and Sonderhof, 2010;Ziebarth and Karlsson, 2010). Many scholars report that incentives matter for sickness absence as well.…”

The individual cost of sick leave

“…The more costly sick leave is for the worker, the less he is away from work. These costs may have several origins: Workers may receive less pay while sick than while working (Henrekson and Persson 2004;Johansson and Palme 2005;Ziebarth and Karlsson 2010), or the sick leave period may have a maximum duration such that the job contract is terminated if this period is exceeded (See e.g. Markussen et al 2011).…”