Worker Absenteeism: Why Firm Size May Matter

Abstract

Absence rates are higher in large firms. This relationship between absence and firm size could possibly be explained if large firms had smaller unit cost of absence. We show, extending a method used by Weiss, that multiple-line firms can be more efficient in insuring against absence through holding buffer-stock workers than single-line firms can. This suggests a theoretical underpinning of the observed relationship. An empirical investigation of the relationship between firm size and absence using German individual and firm data demonstrates the strength of the firm size effect on absence.