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The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior

Upjohn Institute Working Paper No. 15-239

52 Pages Posted: 14 Nov 2015  

Stefan Pichler

KOF Swiss Economic Institute, ETH Zürich

Nicolas R. Ziebarth

Cornell University

Multiple version iconThere are 3 versions of this paper

Date Written: November 11, 2015

Abstract

This paper proposes a test for the existence and degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior and derive testable conditions. Then, we implement the test exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. The labor supply adjustment for contagious diseases is significantly smaller than for noncontagious diseases. Lastly, using Google Flu data and the staggered implementation of U.S. sick leave reforms, we show that flu rates decrease after employees gain access to paid sick leave.

Keywords: Sickness Insurance, Paid Sick Leave, Presenteeism, Contagious Diseases, Infections, Negative Externalities, Shirking, United States, Germany

JEL Classification: I12, I13, I18, J22, J28, J32

Suggested Citation

Pichler, Stefan and Ziebarth, Nicolas R., The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior (November 11, 2015). Upjohn Institute Working Paper No. 15-239. Available at SSRN: https://ssrn.com/abstract=2689852 or http://dx.doi.org/10.2139/ssrn.2689852

Stefan Pichler

KOF Swiss Economic Institute, ETH Zürich ( email )

Leonhardstrasse 21
Zurich, 8092
Switzerland

HOME PAGE: http://www.kof.ethz.ch

Nicolas Ziebarth (Contact Author)

Cornell University ( email )

Ithaca, NY
United States

HOME PAGE: http://www.human.cornell.edu/bio.cfm?netid=nrz2

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