 A natural experiment on sick pay cuts, sickness absence, and labor costsNicolas Ziebarth () and Martin Karlsson Journal of Public Economics, 2010, vol. 94, issue 11-12, 1108-1122 Abstract: This study estimates the reform effects of a reduction in statutory sick pay levels on sickness absence behavior and labor costs. German federal law reduced the legal obligation of German employers to provide 100% continued wage pay for up to six weeks per sickness episode. In 1996 statutory sick pay was decreased to 80% of foregone gross wages. Within the reform's target group - private sector employees - this measure increased the proportion of employees having zero days of absence between 6 and 8%. Quantile regression estimates indicate that employees with up to 5.5 annual absence days reduced their days of absence by about 12%. Extended analyses suggest that in industries that enforced the cut, behavioral effects were about twice as large. We show that the direct labor cost savings effect stemming from the cut in replacement levels clearly exceeds the indirect effect due to the decrease in absenteeism. Our calculations about the total decrease in labor costs are very much in line with official data which suggest that total employer-provided sick pay decreased by 6.7% or [euro]1.7 billion per year. Keywords: Sickness; absence; Statutory; sick; pay; Labor; costs; Natural; experiment; SOEP (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:94:y:2010:i:11-12:p:1108-1122 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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