Job Market Paper
Unemployment, Sick Leave and Health, October 2015
This paper studies the relationships among sick leave, income and unemployment. It focuses on Germany with a generous sick leave regulation of 100% wage replacement, so that workers do not bear any direct costs from sick leave. Based on the German Socio-Economic Panel, I identify three stylized facts of sick leave in Germany. First, the number of sick leave days shows a strong pro-cyclical pattern. Second, the average use of sick leave is hump-shaped over income quintiles. Third, the number of days of sick leave is a strong predictor of future unemployment. I develop a structural model that rationalizes these facts. I argue that in the absence of direct costs of sick leave, the fear of future unemployment is the main driving force restraining sick leave. I calibrate the model to German data and conduct counterfactual policy analysis. By directly affecting the indirect costs of sick leave, unemployment benefits are shown to have a strong effect on sick leave take-up rates: e.g., a 10 percent increase in benefits increases the number of sick leave days by 2% on average and by more than 5% for low income workers.
Other Working Papers
Health and Social Comparison -- Does Envy Make You Sick?, October 2015.
Endogenous Grids in Higher Dimensions: Delaunay Interpolation and Hybrid Methods, joint with Alexander Ludwig, April 2015
Work in Progress
An Endogenous Growth Model with a Health Sector, joint with Jesus Fernandez-Villaverde, Dirk Krueger, and Alexander Ludwig.
Unemployment, Sick Leave and Health, October 2015
This paper studies the relationships among sick leave, income and unemployment. It focuses on Germany with a generous sick leave regulation of 100% wage replacement, so that workers do not bear any direct costs from sick leave. Based on the German Socio-Economic Panel, I identify three stylized facts of sick leave in Germany. First, the number of sick leave days shows a strong pro-cyclical pattern. Second, the average use of sick leave is hump-shaped over income quintiles. Third, the number of days of sick leave is a strong predictor of future unemployment. I develop a structural model that rationalizes these facts. I argue that in the absence of direct costs of sick leave, the fear of future unemployment is the main driving force restraining sick leave. I calibrate the model to German data and conduct counterfactual policy analysis. By directly affecting the indirect costs of sick leave, unemployment benefits are shown to have a strong effect on sick leave take-up rates: e.g., a 10 percent increase in benefits increases the number of sick leave days by 2% on average and by more than 5% for low income workers.
Other Working Papers
Health and Social Comparison -- Does Envy Make You Sick?, October 2015.
Endogenous Grids in Higher Dimensions: Delaunay Interpolation and Hybrid Methods, joint with Alexander Ludwig, April 2015
Work in Progress
An Endogenous Growth Model with a Health Sector, joint with Jesus Fernandez-Villaverde, Dirk Krueger, and Alexander Ludwig.