Dismissal protection and long-term sickness absence: Evidence from a policy change

Abstract

"This paper studies whether a decline in employment protection reduces workers' long-term sickness absences (of >6 weeks). We exploit exogenous variation from a German policy change that shifted the threshold exempting small establishments from dismissal protection from 5 to 10 workers. Using German register data, we find that the reform significantly reduced employees' transitions into long-term sickness during their second year after being hired. This response is due to a behavioral rather than a compositional effect and is particularly pronounced among the medium-skilled and younger males. Further results indicate that the reform did not alter the probability of involuntary unemployment after sickness." (Author's abstract, IAB-Doku, Published by arrangement with John Wiley & Sons) ((en))

Cite article

Gürtzgen, N. & Hiesinger, K. (2024): Dismissal protection and long-term sickness absence: Evidence from a policy change. In: Industrial Relations. DOI:10.1111/irel.12375