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Mandated Sick Pay: Coverage, Utilization, and Welfare Effects

J. Catherine Maclean (), Stefan Pichler () and Nicolas Ziebarth ()
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J. Catherine Maclean: Temple University

No 13132, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper evaluates the labor market effects of sick pay mandates in the United States. Using the National Compensation Survey and difference-in-differences models, we estimate their impact on coverage rates, sick leave use, labor costs, and non-mandated fringe benefits. Sick pay mandates increase coverage significantly by 13 percentage points from a baseline level of 66%. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out other non-mandated fringe benefits. We then develop a model of optimal sick pay provision along with a welfare analysis. For a range of plausible parameter values, mandating sick pay increases welfare.

Keywords: sick pay mandates; sick leave; medical leave; employer mandates; fringe benefits; moral hazard; unintended consequences; labor costs; National Compensation Survey (NCS); welfare effects; optimal social insurance; Baily-Chetty (search for similar items in EconPapers)
JEL-codes: I12 I13 I18 J22 J28 J32 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2020-04
New Economics Papers: this item is included in nep-hea, nep-hrm, nep-ias and nep-lma
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