NBER Disability Research Center

NB13-7, Social Insurance, Firms, and WorkersÂ’ Sickness Absences: Evidence from Austrian Social Security Data Using a Regression Discontinuity Design to Identify Moral Hazards

Rene Boeheim, Johannes Kepler University Linz
Thomas Leoni, Austrian Institute of Economic Research

In case of sickness, workers typically receive sick pay. In several countries, social security insures firms against their workersÂ’ sickness absences. Insurance may create a moral hazard for firms, leading to inefficient monitoring of absences or to an under-investment in the prevention of absences. We will exploit an administrative threshold in Austrian social security that defined the level of the refund a firm received for its workersÂ’ absences. The quasi-experimental situation created by persons above and below the threshold provides causal evidence on the extent of moral hazard induced by the different refund levels. We will estimate the differences in the incidence and duration of sicknesses which were caused by the different refund levels and provide evidence on the extent of moral hazard and the potential for firms to influence the sickness absences of their workers.