Dismissal protection and long-term sickness absence: First evidence from Germany

Nicole Gürtzgen and Karolin Hiesinger

No 20-040, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper analyses the causal effects of weaker dismissal protection on the incidence of long-term sickness (> six weeks). We exploit a German policy change, which shifted the threshold exempting small establishments from dismissal protection from five to ten workers. Using administrative data, we find a significantly negative reform effect on transitions into long-term sickness in the second year after a worker has entered an establishment. This response is due to a behavioural, rather than a compositional effect and is particularly pronounced among medium-skilled males. Our results further indicate that the reform did not alter the probability of involuntary unemployment after sickness.

Keywords: dismissal protection; long-term sickness; involuntary unemployment; difference-in-differences; administrative data; small establishments (search for similar items in EconPapers)
JEL-codes: D02 I12 J28 J38 J63 J88 K31 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-eur, nep-hea, nep-law and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:20040

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