IDEAS home Printed from https://ideas.repec.org/a/sae/ilrrev/v62y2009i3p327-342.html
   My bibliography  Save this article

Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery

Author

Listed:
  • Wolter H.J. Hassink
  • Pierre Koning

Abstract

This paper investigates the effectiveness of a lottery-based bonus reward system in reducing employee absenteeism. Starting in June 2002, a Dutch manufacturing firm held a monthly lottery for workers who had taken no sick leave in the previous three months and had not previously won the lottery. In a given lottery, each of seven contestants whose names were randomly drawn received 75 Euros. The authors find statistically significant differences in absence patterns across groups of workers with different eligibility statuses depending on their attendance records and whether they had previously won. One finding is that absenteeism rose among workers who, having won already, were ineligible for further participation. Nevertheless, and although the reduction in firm-wide absence associated with the lottery drifted from 2.4 percentage points to 1.1 percentage points after seven months, the authors conclude that the lottery was of net benefit to the firm.

Suggested Citation

  • Wolter H.J. Hassink & Pierre Koning, 2009. "Do Financial Bonuses Reduce Employee Absenteeism? Evidence from a Lottery," ILR Review, Cornell University, ILR School, vol. 62(3), pages 327-342, April.
    • Handle: RePEc:sae:ilrrev:v:62:y:2009:i:3:p:327-342
    DOI: 10.1177/001979390906200304
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/001979390906200304
    Download Restriction: no
    File URL: https://libkey.io/10.1177/001979390906200304?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Engellandt, Axel & Riphahn, Regina T., 2004. "Incentive Effects of Bonus Payments: Evidence from an International Company," IZA Discussion Papers 1229, Institute of Labor Economics (IZA).
    2. Johansson, Per & Palme, Marten, 1996. "Do economic incentives affect work absence? Empirical evidence using Swedish micro data," Journal of Public Economics, Elsevier, vol. 59(2), pages 195-218, February.
    3. Andrea Ichino & Regina T. Riphahn, 2005. "The Effect of Employment Protection on Worker Effort: Absenteeism During and After Probation," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 120-143, March.
    4. Sarah Brown & Fathi Fakhfakh & John G. Sessions, 1999. "Absenteeism and Employee Sharing: An Empirical Analysis Based on French Panel Data, 1981–1991," ILR Review, Cornell University, ILR School, vol. 52(2), pages 234-251, January.
    5. Magnus Henrekson & Mats Persson, 2004. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 87-114, January.
    6. Hassink, Wolter & Koning, Pierre, 2005. "Do Financial Bonuses to Employees Reduce Their Absenteeism? Outcome of a Lottery," IZA Discussion Papers 1644, Institute of Labor Economics (IZA).
    7. Georges Dionne & Benoit Dostie, 2007. "New Evidence on the Determinants of Absenteeism Using Linked Employer-Employee Data," ILR Review, Cornell University, ILR School, vol. 61(1), pages 108-120, October.
    8. Kaivanto, Kim, 1997. "An alternative model of pro-cyclical absenteeism," Economics Letters, Elsevier, vol. 54(1), pages 29-34, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jed DeVaro, 2022. "Performance pay, working hours, and health‐related absenteeism," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 327-352, October.
    2. Hassink, Wolter & Fernandez, Roberto M., 2015. "Worker Morale and Effort: Is the Relationship Causal?," IZA Discussion Papers 8909, Institute of Labor Economics (IZA).
    3. Heijnen, Suzanne & Hassink, Wolter & Plantenga, Janneke, 2016. "Sickness absenteeism during a period of job-to-job transition," Economics Letters, Elsevier, vol. 145(C), pages 145-147.
    4. Goerke, Laszlo & Pannenberg, Markus, 2015. "Trade union membership and sickness absence: Evidence from a sick pay reform," Labour Economics, Elsevier, vol. 33(C), pages 13-25.
    5. Christian Pfeifer, 2013. "Cyclical Absenteeism Among Private Sector, Public Sector And Self‐Employed Workers," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 366-370, March.
    6. Nicolas R. Ziebarth & Martin Karlsson, 2014. "The Effects Of Expanding The Generosity Of The Statutory Sickness Insurance System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 208-230, March.
    7. Christian Pfeifer, 2014. "Base Salaries, Bonus Payments, and Work Absence among Managers in a German Company," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(5), pages 523-536, November.
    8. Bryson, Alex & Dale-Olsen, Harald, 2017. "Does Sick Pay Affect Workplace Absence?," IZA Discussion Papers 11222, Institute of Labor Economics (IZA).
    9. Ben S. Meiselman & Collin Weigel & Paul J. Ferraro & Mark Masters & Kent D. Messer & Olesya M. Savchenko & Jordan F. Suter, 2022. "Lottery Incentives and Resource Management: Evidence from the Agricultural Data Reporting Incentive Program (AgDRIP)," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 847-867, August.
    10. D.S. Possenriede & W.H.J. Hassink & J. Plantenga, 2014. "Does temporal and locational flexibility of work reduce absenteeism?," Working Papers 14-09, Utrecht School of Economics.
    11. Wolter Hassink, 2018. "How to reduce workplace absenteeism," IZA World of Labor, Institute of Labor Economics (IZA), pages 447-447, September.
    12. Pierre Koning, 2016. "Privatizing sick pay: Does it work?," IZA World of Labor, Institute of Labor Economics (IZA), pages 324-324, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2010. "An Inquiry into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety at Work," IZA Discussion Papers 4734, Institute of Labor Economics (IZA).
    2. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Performance Pay as an Incentive for Lower Absence Rates in Britain," MPRA Paper 18238, University Library of Munich, Germany.
    3. Ziebarth, Nicolas R. & Karlsson, Martin, 2010. "A natural experiment on sick pay cuts, sickness absence, and labor costs," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1108-1122, December.
    4. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2011. "The Effect of Variable Pay Schemes on Workplace Absenteeism," IZA Discussion Papers 5941, Institute of Labor Economics (IZA).
    5. Maria De Paola & Vincenzo Scoppa & Valeria Pupo, 2014. "Absenteeism in the Italian Public Sector: The Effects of Changes in Sick Leave Policy," Journal of Labor Economics, University of Chicago Press, vol. 32(2), pages 337-360.
    6. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
    7. Konstantinos Pouliakas & Nikolaos Theodoropoulos, 2012. "The Effect of Variable Pay Schemes on Workplace Absenteeism," Research in Labor Economics, in: Research in Labor Economics, pages 109-157, Emerald Group Publishing Limited.
    8. W.H.J. Hassink & P. Koning, 2005. "Do Financial Bonuses to Employees Reduce their Absenteeism? Outcome of a Lottery," Working Papers 05-27, Utrecht School of Economics.
    9. Maria De Paola & Valeria Pupo & Vincenzo Scoppa, 2009. "Absenteeism In The Italian Public Sector: The Effects Of Changes In Sick Leave Compensation," Working Papers 200916, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    10. Pons Rotger, Gabriel & Rosholm, Michael, 2020. "The Role of Beliefs in Long Sickness Absence: Experimental Evidence from a Psychological Intervention," IZA Discussion Papers 13582, Institute of Labor Economics (IZA).
    11. Nilsson, Martin, 2015. "Economic incentives and long-term sickness absence: the indirect effect of replacement rates on absence behavior," Working Paper Series 2015:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    12. Dionne, Georges & Dostie, Benoit, 2008. "Correlated Poisson processes with unobserved Heterogeneity: Estimating the determinants of paid and unpaid leave," Working Papers 08-3, HEC Montreal, Canada Research Chair in Risk Management.
    13. Vincenzo Scoppa & Daniela Vuri, 2014. "Absenteeism, unemployment and employment protection legislation: evidence from Italy," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.
    14. De Paola, Maria, 2010. "Absenteeism and peer interaction effects: Evidence from an Italian Public Institute," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 420-428, June.
    15. Bryson, Alex & Dale-Olsen, Harald, 2017. "Does Sick Pay Affect Workplace Absence?," IZA Discussion Papers 11222, Institute of Labor Economics (IZA).
    16. Jakob Alfitian & Dirk Sliwka & Timo Vogelsang, 2021. "When Bonuses Backfire: Evidence from the Workplace," Natural Field Experiments 00725, The Field Experiments Website.
    17. Harald Dale-Olsen, 2014. "Sickness Absence, Sick Leave Pay, and Pay Schemes," LABOUR, CEIS, vol. 28(1), pages 40-63, March.
    18. Lusine Lusinyan & Leo Bonato, 2007. "Work Absence in Europe," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 475-538, July.
    19. Per Engström & Bertil Holmlund, 2007. "Worker Absenteeism in Search Equilibrium," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 439-467, September.
    20. Hesselius, Patrik, 2003. "Does Sick Absence Increase the Risk of Unemployment?," Working Paper Series 2003:15, Uppsala University, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ilrrev:v:62:y:2009:i:3:p:327-342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ilr.cornell.edu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.