A kink that makes you sick: The effect of sick pay on absence

Petri Böckerman (), Ohto Kanninen and Ilpo Suoniemi

Journal of Applied Econometrics, 2018, vol. 33, issue 4, 568-579

Abstract: We exploit a regression kink design to estimate the elasticity of the duration of sickness absence with respect to replacement rate. Elasticity is a central parameter in defining the optimal social insurance scheme compensating for lost earnings due to sickness. We use comprehensive administrative data and a kink in the policy rule near the median earnings. We find a statistically significant estimate of the elasticity of the order of one.

Date: 2018
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https://doi.org/10.1002/jae.2620

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Working Paper: A Kink that Makes You Sick: The Effect of Sick Pay on Absence (2018)
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