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

Petri Böckerman (), Ohto Kanninen and Ilpo Suoniemi

No 8205, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: paid sick leave; sickness absence; labor supply; sick pay; regression kink design (search for similar items in EconPapers)
JEL-codes: I13 I18 J22 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-05
New Economics Papers: this item is included in nep-hea, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published as "A Kink that Makes You Sick: The Effect of Sick Pay on Absence" in: Journal of Applied Econometrics, 2018, 33 (4), 568-579

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Working Paper: A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence (2014)
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