THE EFFECTS OF EXPANDING THE GENEROSITY OF THE STATUTORY SICKNESS INSURANCE SYSTEM

Authors

  • Nicolas R. Ziebarth,

    Corresponding author
    1. Department of Policy Analysis and Management, Cornell University, Ithaca, NY, USA
    2. DIW Berlin, Germany
    3. IZA, Bonn, Germnay
    • Correspondence to: Nicolas R. Ziebarth, Cornell University, College of Human Ecology, Department of Policy Analysis and Management (PAM), 106 Martha Van Rensselaer Hall, Ithaca, NY 14853, USA. E-mail: nrz2@cornell.edu

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  • Martin Karlsson

    1. University of Duisburg-Essen, Germany
    2. University of Oslo
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SUMMARY

This article evaluates an expansion of employer-mandated sick leave from 80% to 100% of forgone gross wages in Germany. We employ and compare parametric difference-in-difference (DID), matching DID and mixed approaches. Overall workplace absences increased by at least 10% or 1 day per worker per year. We show that taking partial compliance into account increases coefficient estimates. Further, heterogeneity in response behavior was of great importance. There is no evidence that the increase in sick leave improved employee health, a finding that supports a shirking explanation. Finally, we provide evidence on potential labor market adjustments to the reform. Copyright © 2013 John Wiley & Sons, Ltd.

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