Mandated Sick Pay: Coverage, Utilization, and Welfare Effects
This paper evaluates the labor market effects of sick pay mandates 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 13 percentage points from a baseline level of 66%. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out other non-mandated fringe benefits. We then develop a model of optimal sick pay provision along with a welfare analysis. Mandating sick pay likely increases welfare.
We thank Ronald Bachmann, Sonia Bhalotra, Nicholas Bloom, Chris Bollinger, David Bradford, Michael Burda, Colleen Carey, Eric Chyn, Michael Darden, Emilia deBono, Marcus Dillender, Gary Engelhardt, Itzik Fadlon, Jonas Feld, Laszko Goerke, Enda Hargaden, Sarah Hamersma, Sven Hartman, Matt Harris, Nathan Hendren, Martin Karlsson, Jing Li, Domenico Lisi, Norman Lorenz, Rick Mansfield, Fabrizio Mazzonna, Kathy Michelmore, 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, Ansgar Wübker, V´era Zabrodina, and Maria Zhu for helpful comments and suggestions. In particular, we thank our discussants Priyanka Anand, Pascale Lengagne and Simona Gamba as well as Katherine Wen for excellent research assistance. Moreover, we thank participants at the American-European Health Economics Study Group meeting in Vienna, the Annual MaTax Conference at ZEW Mannheim, the 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 Annual Meetings of the Southern Economic Association (SEA), the APPAM Fall Research Conference in Denver, the European Conference on Health Economics (Eu- HEA) in Maastricht, the 2018 and 2019 Annual Meetings of the Society of Labor Economists (SOLE), the International Health Economics Association (iHEA) in Basel, the 2019 IRDES-DAUPHINE Workshop on Applied Health Economics and Policy Evaluation, the 2018 IZA World Labor Conference, the 2019 NBER Workshop on Labor Demand and Older Workers in Cambridge, the 2019 SKILS seminar in Engelberg as well as in research seminars at the Center for Health Economics & Policy Studies (CHEPS) at San Diego State University, Cornell University, the Düsseldorf Institute for Competition Economics (DICE), 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 Ottawa, the University of Southern Florida, 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. Generous funding from the Robert Wood Johnson Foundation’s Policies for Action Program (#74921), 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 views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- The COVID-19 pandemic has brought renewed attention to the fact that the US does not provide universal access to paid sick leave for...