The sick pay trap

Arbeitspapier

In most countries, employers are financially responsible for sick pay during an initial period of a worker's absence spell, after which the public insurance system covers the bill. Based on a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that firms' absence costs significantly affect employees' absence behavior. However, by restricting pay liability to the initial period of the absence spell, firms are discouraged from letting long-term sick workers back into work, since they then face the financial risk associated with subsequent relapses. We show that this disincentive effect is statistically and economically significant.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5655

Classification and Topics

• Classification: Wirtschaft ; Semiparametric and Nonparametric Methods: General ; Duration Analysis; Optimal Timing Strategies ; Social Security and Public Pensions ; Health: Government Policy; Regulation; Public Health ; Labor Demand
• Subject: absenteeism ; social insurance ; experience rating ; multivariate hazard rate models ; Lohnfortzahlung ; Arbeitskosten ; Erwerbsunfähigkeit ; Berufseinstieg ; Schätzung ; Norwegen

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fevang, Elisabeth ; Markussen, Simen ; Røed, Knut
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/51814
• URN: urn:nbn:de:101:1-201104213214
• Last update: 10.03.2025, 11:44 AM CET