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The Effects of Expanding the Generosity of the Statutory Sickness Insurance System

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  • Nicolas R. Ziebarth
  • Martin Karlsson

Abstract

In 1999, in Germany, the statutory sick pay level was increased from 80 to 100 percent of foregone earnings for sicknessepisodes of up to six weeks. We show that this reform has led to an increase in average absence days of about 10 percent or one additional day per employee, per year. The estimates are based on SOEP survey data and parametric, nonparametric, and combined matching-regression difference-in-differences methods. Extended calculations suggest that the reform might have increased labor costs by about €1.8 billion per year and might have led to the loss of around 50,000 jobs.

Suggested Citation

  • Nicolas R. Ziebarth & Martin Karlsson, 2009. "The Effects of Expanding the Generosity of the Statutory Sickness Insurance System," SOEPpapers on Multidisciplinary Panel Data Research 245, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp245
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    More about this item

    Keywords

    Sickness absence; statutory sick pay; natural experiment; Socio-Economic Panel Study (SOEP);
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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