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

43 Pages Posted: 31 May 2014

See all articles by Petri Bockerman

Petri Bockerman

Labour Institute for Economic Research; University of Turku - Turku School of Economics

Ohto Kanninen

Labour Institute for Economic Research

Ilpo Suoniemi

Labour Institute for Economic Research

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

JEL Classification: I13, I18, J22

Suggested Citation

Bockerman, Petri and Kanninen, Ohto and Suoniemi, Ilpo, A Kink that Makes You Sick: The Incentive Effect of Sick Pay on Absence. IZA Discussion Paper No. 8205, Available at SSRN: https://ssrn.com/abstract=2444069

Petri Bockerman (Contact Author)

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland
+358 9 2535 7332 (Phone)
+358 9 2535 7332 (Fax)

HOME PAGE: http://www.petribockerman.fi/

University of Turku - Turku School of Economics ( email )

Rehtorinpellonkatu 3
TURKU, FI-20500
Finland

Ohto Kanninen

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland

Ilpo Suoniemi

Labour Institute for Economic Research ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
53
Abstract Views
497
rank
451,994
PlumX Metrics