Employee Health and Firm Performance

67 Pages Posted: 8 Mar 2022 Last revised: 25 Apr 2023

See all articles by Daniel A. Rettl

Daniel A. Rettl

University of Georgia - Department of Banking and Finance

Alexander Schandlbauer

University of Southern Denmark ; Danish Finance Institute

Mircea Trandafir

Rockwool Foundation Reserch Unit

Multiple version iconThere are 2 versions of this paper

Date Written: April 25, 2023


Using administrative data on the universe of private firms in Denmark, we find that even temporary and small health shocks to employee health like seasonal influenza can significantly reduce firm profitability. The results hold both across firms and within firms, at the establishment level. The effects are driven by labor-intensive firms and decrease in firm size and financial flexibility, suggesting that firms that are better able to shift resources can better mitigate the effects of health shocks. Our results indicate that employees are shielded from these negative effects, while owners (especially of small firms) see reduced dividends. Firms with a larger share of low-salary and low-skill employees are more affected, emphasizing that the health of all employees matters for firm performance and not just top employees like the CEO. Finally, back-of-the-envelope calculations suggest that all but the largest firms may benefit from subsidizing vaccination programs for their employees.

Keywords: seasonal influenza, health shock, firm performance

JEL Classification: L25, I12, G30, J31

Suggested Citation

Rettl, Daniel A. and Schandlbauer, Alexander and Trandafir, Mircea, Employee Health and Firm Performance (April 25, 2023). Available at SSRN: https://ssrn.com/abstract=4022672 or http://dx.doi.org/10.2139/ssrn.4022672

Daniel A. Rettl

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Alexander Schandlbauer (Contact Author)

University of Southern Denmark ( email )

Campusvej 55

HOME PAGE: http://sites.google.com/site/alexanderschandlbauer/

Danish Finance Institute ( email )

Mircea Trandafir

Rockwool Foundation Reserch Unit ( email )

Sejroegade 11
DK-2100 Copenhagen

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