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A Kink that Makes You Sick: The Effect of Sick Pay on Absence

Petri Böckerman (), Kanninen Ohto and Suoniemi Ilpo

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Sick pay; labor supply; sickness absence; regression kink design; social insurance (search for similar items in EconPapers)
JEL-codes: H55 I13 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea, nep-ias, nep-lma and nep-pbe
Date: 2018-06-20
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Published in Journal of Applied Econometrics 33.4(2018): pp. 568-579

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