A Kink that Makes You Sick: the Effect of Sick Pay on Absence in a Social Insurance System

Petri Böckerman (), Ohto Kanninen and Ilpo Suoniemi

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the effect of the replacement rule of a social insurance system on sickness absence. The elasticity of absence with respect to the benefit level is a critical parameter in defining the optimal sickness insurance scheme. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the causal effect using a regression kink design. Using a large administrative dataset, 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 in a social insurance system is on the order of 1.

Keywords: Sick pay; labor supply; sickness absence; regression kink design; social insurance (search for similar items in EconPapers)
JEL-codes: I18 I3 J22 (search for similar items in EconPapers)
Date: 2014-12-30
New Economics Papers: this item is included in nep-ias, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: A Kink that Makes You Sick: the Effect of Sick Pay on Absence in a Social Insurance System (2015)
Working Paper: A Kink that Makes you Sick: the Effect of Sick Pay on Absence in a Social Insurance System (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:61010

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