Pay, Technology and the Cost of Worker Absence

42 Pages Posted: 8 Aug 2002

See all articles by John G. Treble

John G. Treble

Swansea University - Department of Economics; University of Essex - Institute for Labour Research

Melvyn G. Coles

University of Essex - Department of Economics; Autonomous University of Barcelona; IZA Institute of Labor Economics

Joseph Lanfranchi

Université Panthéon Assas, LEM

Ali Skalli

Université Paris II - Panthéon-Assas - ERMES

Date Written: June 2002

Abstract

Conventional studies of absenteeism concentrate on labour supply. In this paper we analyse records of worker behaviour which enable us to investigate whether or not demand side effects exist. Using a compensating differentials model, we study how the shadow cost of absenteeism varies across firms which operate different technologies, (The shadow cost is the amount a firm would be prepared to pay to achieve a given small reduction in its absence rate.)

It is to be expected that pay for a less reliable workforce would be less than for a more reliable one, and we confirm this expectation. More subtle is the rate at which remuneration should fall with increased unreliability. We claim that just-in-time technology implies that absence will be more expensive for firms adopting it. The loss of productivity when absence occurs will be greater for such firms than for others, and the wage premium for reliability should thus be higher for such firms.

Using a matched employee/employer dataset from France, we are able to establish the existence of statistically significant differences of the kind predicted by the theory, and estimate the shadow cost of worker absence for firms operating different kinds of technology.

Keywords: Absenteeism; Just-in-time; Pay

JEL Classification: J0, J2, J3

Suggested Citation

Treble, John G. and Coles, Melvyn G. and Lanfranchi, Joseph and Skalli, Ali, Pay, Technology and the Cost of Worker Absence (June 2002). Available at SSRN: https://ssrn.com/abstract=319360 or http://dx.doi.org/10.2139/ssrn.319360

John G. Treble (Contact Author)

Swansea University - Department of Economics ( email )

Swansea SA2 8PP
United Kingdom

University of Essex - Institute for Labour Research

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Melvyn G. Coles

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206 873333 (Phone)
+44 1206 872724 (Fax)

Autonomous University of Barcelona

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
SPAIN

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Joseph Lanfranchi

Université Panthéon Assas, LEM ( email )

5/7, avenue Vavin
75006 Paris, 75006
France
+33-1-55-42-50-26 (Phone)

Ali Skalli

Université Paris II - Panthéon-Assas - ERMES ( email )

92, rue d'Assas - F-75231 Paris Cedex 06
75 230 Paris, Cedex 5
France

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