Mandated Sick Pay: Coverage, Utilization, and Welfare Effects
This paper evaluates how sick pay mandates operate at the job level in the United States. Using the National Compensation Survey and difference-in-differences models, we estimate their impact on coverage rates, sick leave use, labor costs, and non-mandated fringe benefits. Sick pay mandates increase coverage significantly by 18 percentage points from a baseline level of 66%in the first two years. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out non-mandated fringe benefits. Finally, we develop a model of optimal sick pay provision and illustrate the trade-offs when assessing welfare.
We thank Jérôme Adda, Alexander Ahammer, Ronald Bachmann, Sonia Bhalotra, Nicholas Bloom, Chris Bollinger, René Böheim, David Bradford, Michael Burda, Colleen Carey, Michael Darden, Emilia deBono, Arindrajit Dube, Marcus Dillender, Gary Engelhardt, Itzik Fadlon, Jonas Feld, Alfonso Flores-Lagunes, Anne Gielen, Laszko Goerke, Martin Halla, Enda Hargaden, Sarah Hamersma, Sven Hartman, Matt Harris, Nathan Hendren, Martin Karlsson, Pierre Koning, Wojciech Kopczuk, Jing Li, Domenico Lisi, Norman Lorenz, Rick Mansfield, Olivier Marie, Fabrizio Mazzonna, Kathy Michelmore, Magne Mogstad, Sean Murphy, Kathleen Mullen, Robert Nuscheler, Reto Odermatt, Alberto Palermo, Nico Pestel, Giovanni Pica, Joe Sabia, Kjell Salvanes, Seth Sanders, Brenda Samaniego de la Parra, Bruce Schackman, Georg Schaur, Bernhard Schmidpeter, Seth Seabury, Kathryn Shaw, Siggi Siegloch, Perry Singleton, Stefan Staubli, Holger Stichnoth, Alois Stutzer, Joanna Tyrowicz, Mark Unruh, Christian Vossler, Bruce Weinberg, Rudolf Winter-Ebmer, Ansgar Wübker, Véra Zabrodina, and Maria Zhu for helpful comments and suggestions. In particular, we thank our discussants Priyanka Anand, Eric Chyn, Pascale Lengagne and Simona Gamba as well as Katherine Wen for excellent research assistance. Moreover, we thank participants at the 2020 World Risk and Insurance Economics Congress (WRIEC), the 2020 HEaLth and Pandemics (HELP!) Econ Working Group, the 2020 Equitable Growth Conference, the the 2019 American-European Health Economics Study Group meeting in Vienna, the 2019 NBER Workshop on Labor Demand and Older Workers in Cambridge, the 2019 SKILS seminar in Engelberg, the 2019 International Health Economics Association (iHEA) in Basel, the 2019 IRDES-DAUPHINE Workshop on Applied Health Economics and Policy Evaluation, the 2018 Annual MaTax Conference at ZEW Mannheim, the 2018 Annual Conference of the American Society of Health Economists (ASHEcon) in Atlanta, the Annual Conference of the European Society for Population Economics (ESPE) in Antwerp, the 2018 Annual Meetings of the Southern Economic Association (SEA), the 2019 APPAM Fall Research Conference in Denver, the 2018 European Conference on Health Economics (EuHEA) in Maastricht, the 2018 and 2019 Annual Meetings of the Society of Labor Economists (SOLE), the 2018 IZA World Labor Conference, the Auckland University of Technology School of Economics Research Seminar, the University of Linz’ Online Economics Research Seminar, the Tinbergen Institute’s Labor Seminar as well as in research seminars at the Center for Health Economics & Policy Studies (CHEPS) at San Diego State University, Cornell University, Corvinus University, the Düsseldorf Institute for Competition Economics (DICE), ETH Zurich, HEC Montreal, IAAEU at the University of Trier, the Institute of Economics at the Università della Svizzera Italiana, ISER at the University of Essex, the Robert Wood Johnson Foundation (RWJF), Syracuse University, RWI Essen, the University of Augsburg, the University of Basel, the University of Hamburg, the University of Mannheim and ZEW, the University of Ottawa, the University of Southern Florida, the University of St. Gallen, the University of Tennessee, and Weill Cornell Medicine for their helpful comments and suggestions. Last but not least we thank Maury Gittleman at the Bureau of Labor Statistics for helping us with numerous data questions. This research was conducted with restricted access to Bureau of Labor Statistics (BLS) data. The views expressed here do not necessarily reflect the views of the BLS or the National Bureau of Economic Research. Generous funding from the Robert Wood Johnson Foundation’s Policies for Action Program (#74921) and the W.E. Upjohn Institute for Employment Research’s Early Career Research Awards (ECRA) program #17-155-15 are gratefully acknowledged. Neither we nor our employers have relevant or material financial interests that relate to the research described in this paper. We take responsibility for all remaining errors in and shortcomings of the paper.
- The COVID-19 pandemic has brought renewed attention to the fact that the US does not provide universal access to paid sick leave for...