Health and sick leave - policy makers' trade-offs
By Markussen, Simen
|| This paper is built on a simple idea that work is healthy for healthy workers,
while it may delay recovery for sick workers. Its main novelty is that it sets out
a theory designed to integrate this simple idea into a more standard labor supply
model, where workers trade o¤ absence and leisure against the economic loss in-
volved. A calibrated version of this model is then used to discuss optimal sickness
insurance policies. The results are: (i) there is a con?ict between maximizing health
and minimizing sick leave, (ii) optimal sick-leave bene?ts are neither zero nor 100
percent, (iii) a calibrated version of the model predicts optimal sick-leave bene?ts
to be around 70 percent of earnings.
1134 A viable welfare state |
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