The Sick Pay Trap

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Fevang, Elisabeth, Simen Markussen og Knut Røed




Andre skrifter
IZA Discussion paper no 5655

Sammendrag (engelsk)

In most countries, employers are financially responsible for sick pay during an initial period of a worker’s absence spell, after which the public insurance system covers the bill. Based on a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that firms’ absence costs significantly affect employees’ absence behavior. However, by restricting pay liability to the initial period of the absence spell, firms are discouraged from letting long-term sick workers back into work, since they then face the financial risk associated with subsequent relapses. We show that this disincentive effect is statistically and economically significant.


absenteeism, social insurance, experience rating, multivariate hazard rate models


C14, C41, H55, I18, J23

Prosjekt info:

Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 187924
Frisch prosjekt: 4132 - Sykefravær i Norge - Årsaker, konsekvenser og politikkimplikasjoner