Correlated Poisson Processes with Unobserved Heterogeneity: Estimating the Determinants of Paid and Unpaid Leave

31 Pages Posted: 18 Aug 2008

See all articles by Georges Dionne

Georges Dionne

HEC Montreal - Department of Finance

Benoit Dostie

HEC Montreal - Institute of Applied Economics; IZA Institute of Labor Economics

Abstract

Using linked employer-employee data from the Canadian Workplace and Employee Survey 1999-2004, we provide new evidence on how the cost of absence affects labor supply decisions. We use a particular feature of the data by which total absences are divided into three separate categories: sick paid days, other paid days and unpaid days. This division introduces variations in the way workers are compensated for absence (the cost of absence) and allows us to estimate more precisely how variations in such costs affect absenteeism decisions. We find an absence elasticity of -0.37. We also find unobserved heterogeneity to play different roles for workers and workplaces: some workers are more frequently absent whatever the reason, but paid and unpaid leaves are negatively correlated at the workplace level.

Keywords: absenteeism, linked employer-employee data, unobserved heterogeneity, count data model, correlated random effects

JEL Classification: J22, M52

Suggested Citation

Dionne, Georges and Dostie, Benoit, Correlated Poisson Processes with Unobserved Heterogeneity: Estimating the Determinants of Paid and Unpaid Leave. IZA Discussion Paper No. 3642, Available at SSRN: https://ssrn.com/abstract=1230829 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Georges Dionne (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6596 (Phone)
514-340-5019 (Fax)

HOME PAGE: http://www.hec.ca/gestiondesrisques/

Benoit Dostie

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada
514-340-6453 (Phone)
514-340-6469 (Fax)

HOME PAGE: http://www.hec.ca/profs/benoit.dostie.html

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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