Unemployment, Sick Leave and Health

Matthias Schön

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies the relationship between sick leave, income and unemployment. In particular, it investigates this relationship under the generous German sick leave regulation of 100\% wage replacement, i.e., in an environment where workers do not bear any direct costs from missing work due to sickness. Using information from the German Socioeconomic Panel (GSOEP) I identify three stylized facts of sick leave in Germany. First, sick days show a strong pro-cyclical pattern. Second, average use of sick days is hump-shaped over income quintiles. Third, the number of sick days is a strong predictor of becoming unemployed. Using this micro-evidence I develop a structural model that rationalizes these facts. I argue that in absence of direct costs of sick leave the fear of future unemployment is the main driving force restraining sick leave. I then use the model to do counterfactual policy analysis.

JEL-codes: I14 I18 J20 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-eur and nep-hea
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113013

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