The Sick Pay Trap

Fevang, Elisabeth; Markussen, Simen; Røed, Knut

doi:10.1086/673400

Cited by 62 publications

(58 citation statements)

References 16 publications

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“…This is in line with the standard predictions of our model and the previous literature Palme 1996, 2005;Ziebarth and Karlsson 2010;De Paola et al 2014;Ziebarth and Karlsson 2014;Fevang et al 2014). Next, and more importantly, we analyze the labor supply effects by certified disease categories.…”

supporting

confidence: 87%

“…Despite being of tremendous relevance, empirically proving the existence of presenteeism with contagious diseases is extremely difficult, if not impossible, because contagiousness is generally unobservable. Several empirical papers evaluate the causal effects of cuts in sick pay and find that employees adjust their labor supply in response to such cuts Palme 1996, 2005;Ziebarth and Karlsson 2010;De Paola et al 2014;Ziebarth and Karlsson 2014;Dale-Olsen 2014;Fevang et al 2014). 1 Traditionally, behavioral adjustments to varying levels of insurance generosity is labeled "moral hazard" in economics (Pauly 1974(Pauly , 1983Arnott and Stiglitz 1991;Nyman 1999;Newhouse 2006;Felder 2008;Bhattacharya and Packalen 2012).…”

mentioning

confidence: 99%

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The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior

Pichler¹,

Ziebarth²

2015

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This paper proposes a test for the existence and degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior and derive testable conditions. Then, we implement the test 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 noncontagious diseases. Lastly, using Google Flu data and the staggered implementation of U.S. sick leave reforms, we show that flu rates decrease after employees gain access to paid sick leave. JEL Classification Codes: I12, I13, I18, J22, J28, J32

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supporting

confidence: 87%

mentioning

confidence: 99%

The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior

Pichler¹,

Ziebarth²

2015

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“…The generosity of the system made it susceptible to moral hazard problems; for both rms and workers the scheme functioned as an attractive alternative pathway 1 Note that there is a related literature that studies the e ect of experience rating in the context of sickness bene ts, see e.g. Fevang et al (2011) and Böheim and Leoni (2011).…”

Section: Institutional Settingmentioning

confidence: 99%

Assessing the effects of disability insurance experience rating. The case of The Netherlands

Groot

Koning

2016

Labour Economics

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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. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Assessing the Effects of Disability InsuranceIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Experience rated Disability Insurance (DI) premiums are often advocated as a means to stimulate firms to reduce DI inflow and increase DI outflow. To assess the size of these intended effects of experience rating, this study provides an empirical analysis of the effects of DI experience rating in the Netherlands. We use a difference-in-difference approach with administrative matched firm and worker data that exploits the removal of experience rating for small firms in 2003 and 2004. According to our results, removing experience rating caused an increase of DI inflow of about 7% for small firms, while DI outflow decreased by 12% as a result of the reform. We argue that these effects were largely confined to the sickness period that preceded the DI claims assessment, as well as the first year of DI benefit receipt. JEL Classification:H22, I12, C23

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“…As firms are insured against the direct costs of long term sickness absence, they will exert too little effort in keeping absence rates low (OECD 2010). Empirical evidence suggests this is indeed the case: Fevang et al (2014), using data from a Norwegian reform removing firms' copay for pregnant women's sickness absences, found significant increases in absence rates. If grading sickness certificates increases the costs of absence to firms, this could be one channel explaining the beneficial effects of grading on patients' labor market outcomes.…”

Section: Introductionmentioning

confidence: 99%

“…There is some evidence that reducing firms' direct costs of sickness absence leads to less statistical discrimination of high risk workers. Fevang et al (2014) illustrates this dillema: the authors found that the reform, mentioned above, which reduced firms' costs of sickness absence of pregnant women significantly increased hiring rates of women of childbearing age. In addition, a worker's absence history may be a factor for firms when deciding whether or not to offer permanent contracts to an individual on a temporary contract.…”

Section: Introductionmentioning

confidence: 99%

Profiting from presenteeism? Effects of an enforced activation policy on firm profits

Godøy

2016

Labour Economics

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Activation requirements and graded benefits are strategies for reducing social insurance costs in comprehensive welfare states. In Norway, a policy of issuing graded rather than full time sickness absence certificates, is viewed as a strategy not just to reduce direct costs of sick pay but also to facilitate returns to work and reduce inflows to permanent disability. This paper analyzes effects of graded sick leave on firm profits, on average and across different firm groups. A series of panel data models are formulated to estimate the effects of grading on firm profits. In these models, grading is found to mitigate the negative effects of sickness absence on firm profit. A one percentage point increase in full time sickness absence leads to a 1.7% reduction in return on assets relative to the sample mean; this negative effect is reduced by 70% when absence is graded. Effects are robust to inclusion of firm fixed effects as well as time-varying proxies for labor demand.

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The Sick Pay Trap

Cited by 62 publications

References 16 publications

The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior

The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior

Assessing the effects of disability insurance experience rating. The case of The Netherlands

Profiting from presenteeism? Effects of an enforced activation policy on firm profits

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