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Mandatory Sick Pay Provision: A Labor Market Experiment

Stefan Bauernschuster, Jörg Oechssler, Peter Duersch and Radovan Vadovic ()
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Peter Duersch: University of Heidelberg

Authors registered in the RePEc Author Service: Peter Dürsch

No 2009-076, Jena Economic Research Papers from Friedrich-Schiller-University Jena

Abstract: The question whether a minimum rate of sick pay should be mandated is much debated. We study the effects of this kind of intervention in an experimental labor market that is rich enough to allow for moral hazard, adverse selection, and crowding out of good intentions to occur. We find that higher sick pay is reciprocated by workers through higher effort but only if sick pay is not mandated. We also study adverse selection effects when workers have different probabilities of getting sick and can reject the hypothesis that this leads to market breakdown. Overall, we find that mandating sick pay actually leads to a higher voluntary provision of sick pay by ?rms.

Keywords: sick pay; sick leave; experiment; gift exchange (search for similar items in EconPapers)
JEL-codes: J3 C7 C9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp, nep-hea and nep-lab
Date: 2009-09-25
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Related works:
Journal Article: Mandatory sick pay provision: A labor market experiment (2010) Downloads
Working Paper: Mandatory Sick Pay Provision: A Labor Market Experiment (2010) Downloads
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