Institute of Economics
Date: / -
Aula 408, Università della Svizzera italiana, Campus Lugano
This paper evaluates the effects of employer sick pay mandates on sick pay coverage, utilization and labor costs in the United States. Using the National Compensation Survey, we estimate difference-in-differences models in an event study design. Sick pay coverage increases significantly by 9 percentage points from a baseline level of 64 percent in the first two years, but then plateaus over the next four years. Newly covered employees take two additional sick days in the first quarter of the year, increasing labor costs by 23 cents per hour worked for marginal firms. However, we find little evidence that mandated sick pay crowds-out other non-mandated paid leave benefits. Finally, we provide a model of optimal sick pay provision along with a welfare analysis which suggests that mandating sick pay likely increased welfare.