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

Petri Böckerman (), Ohto Kanninen and Ilpo Suoniemi

No 292, Working Papers from Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE

Abstract: This paper examines the effect of the replacement rule of the Finnish sickness insurance system on the duration of sickness absence. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the effect using a regression kink design. We find a substantial and robust behavioral response. The statistically significant point estimate of the elasticity of the duration of sickness absence with respect to the replacement rate is on the order of 1.4.

Keywords: Sick pay; labor supply; sickness absence; paid sick leave; regression kink design (search for similar items in EconPapers)
JEL-codes: I13 I18 J22 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-12-21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence (2014)
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