We analyze the effect of economic incentives on worker absenteeism, using panel data on work absence for 1990 and 1991 with a sample of 1,396 Swedish blue-collar workers. During this period Sweden implemented major reforms of both its national income replacement program for short-term sickness and income taxes. Both affected the worker’s cost of missing work. Our econometric model allows for state-dependent dynamic behavior and control for unobserved heterogeneity. The latter proves to be an important consideration. We find that the cost of being absent significantly affects work absence behavior.
Introduction: The effect of tax and walfare policies on the contracted number of hours of work in the economy has been extensively analyzed in the empirical labor supply literatute.As is well known, however, there are several additional aspect of the relationship between public policy and work effect.
Author: Per Johansson,Mårten Palme
Source: Institute for Labour Market Policy Evaluation
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