Sick pay provision in experimental labor markets

Peter Duersch, Jörg Oechssler and Radovan Vadovic ()
Authors registered in the RePEc Author Service: Peter Dürsch

European Economic Review, 2012, vol. 56, issue 1, 1-19

Abstract: Sick pay is a common provision in most labor contracts. This paper employs an experimental gift exchange environment to explore two related questions using both managers and undergraduates as subjects. First, do workers reciprocate generous sick pay with higher effort? Second, do firms benefit from offering sick pay? Our main finding is that workers do reciprocate generous sick pay with higher effort. However, firms benefit from offering sick pay in terms of profits only if there is competition among firms for workers. Consequently, competition leads to a higher voluntary provision of sick pay relative to a monopsonistic labor market.

Keywords: Sick pay; Sick leave; Experiment; Gift exchange (search for similar items in EconPapers)
JEL-codes: C7 C9 J3 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Sick Pay Provision in Experimental Labor Markets (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:1:p:1-19

DOI: 10.1016/j.euroecorev.2011.08.002

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