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

51 Pages Posted: 2 Oct 2015

See all articles by Stefan Pichler

Stefan Pichler

KOF Swiss Economic Institute, ETH Zürich

Nicolas R. Ziebarth

Cornell University

Multiple version iconThere are 3 versions of this paper

Date Written: September 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 non-contagious diseases. Lastly, using Google Flu data and the staggered implementation of US 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, US, 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 (September 2015). DIW Berlin Discussion Paper No. 1509, Available at SSRN: https://ssrn.com/abstract=2668490 or http://dx.doi.org/10.2139/ssrn.2668490

Stefan Pichler

KOF Swiss Economic Institute, ETH Zürich ( email )

Leonhardstrasse 21
Zurich, 8092
Switzerland

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

Nicolas R. 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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