The impact of working conditions on sickness absence: a theoretical model and an empirical application to work schedules

This paper explores how poor working conditions impact sickness absence through their effect on health. Our contribution is two-fold. First, we develop a static theoretical model based on the concept of health capital, wherein poor working conditions are partially compensated by higher wages. According to our model, the effect of working conditions on sickness absence is ambiguous. Second, we apply our model to the case of working time arrangements and test the effect of working irregular schedules or work around the clock on sickness absence, using data from the French Labor Force Survey on a specific population (male manual workers in private sector). As heterogeneity may lead to severe bias, we use propensity score matching methods. Our estimates show that working irregular schedules has a significant impact on sickness absence. The results are more mitigated for work around the clock. In any case, the extent crucially depends on age.     

What if they take it all? Heterogeneous impact of sickness absence reform

I investigate the effect of sickness absence reform in the Czech Republic, which reduced benefits paid during the first three days of sickness absence to zero. I find a substantial decrease in the incidence of sickness absence, which is about 15 percent of the pre‐reform mean. I find that workers in occupations with high flexibility and fewer routine tasks are more likely to reduce their sickness absences.     

Does violence against civilians depress voter turnout? Evidence from Bosnia and Herzegovina

We investigate the effect of violence against civilians on voting. Using data from elections in Bosnia and Herzegovina between 1990 and 2014 and exploiting variation in war intensity across municipalities, we estimate a negative impact on voter turnout. The effect is stable and persistent over twenty years after the war resolution. Our results are robust to the inclusion of pre- and post-war socioeconomic and political characteristics, to instrumental variable estimations based on terrain ruggedness, and to restricting the sample to voters who were too young to be selectively targeted. Distinguishing between civilian and military victims, we show that violence against civilians drives the negative effect. Next, we examine different mediating mechanisms including forced migration and demographic selection, ethnic composition, physical capital damage, post-conflict reconstruction, and labor market conditions. Our results support the hypothesis that violence affects voting through a “moral” dis-utility from showing allegiance to politics and the society by casting a vote. Using survey data, we show that respondents in more affected municipalities report lower generalized trust, trust in institutions, and voting.     

Can sickness absence be affected by information meetings? Evidence from a social experiment

During the last decade several empirical studies have stressed the importance of norms and social interactions for explaining sickness-absence behavior. In this context, public discussions about the intentions of the insurance, and of the rights and duties of the receivers, may be important for reducing the sickness absence. In this article, we study whether information meetings about the Swedish sickness insurance affect the length of sickness-absence spells. The study is based on experimental data on individuals with weak labor market attachments. The displacement of when the call to the meeting was sent out was randomized. Comparing the survival functions of those called immediately with those whose calls were delayed (by about 30 days) makes it possible to study whether the length of sickness absence is affected by receiving the call earlier. The result suggests that the length is reduced by, on average, 20%. In the long term (12 months later), there is no effect of the information meeting. This suggests that attendance to the information meeting does not change individuals’ long-term behavior.     

Moral hazard and sickness insurance

We study if the replacement level in the Swedish national sickness insurance, which replaces foregone earnings due to temporary illnesses, affects work absence behavior. We use micro data and estimate the effects of a major reform, whereby the replacement level during the first 90 days in each absence spell was reduced, on work attendance. To separate out the effect of the reform from any trend in work absence, we distinguish between the implications on the incidence of work absence (i.e., the frequency of spells) and the duration of the spells. We also use a regression-discontinuity approach to estimate the effects on the prevalence of work absence. Finally, we estimate elasticities with respect to the replacement level in the sickness insurance.     

A natural experiment on sick pay cuts,sickness absence,and labor costs

This study estimates the reform effects of a reduction in statutory sick pay levels on sickness absence behavior and labor costs. German federal law reduced the legal obligation of German employers to provide 100% continued wage pay for up to six weeks per sickness episode. In 1996 statutory sick pay was decreased to 80% of foregone gross wages. Within the reform's target group – private sector employees – this measure increased the proportion of employees having zero days of absence between 6 and 8%. Quantile regression estimates indicate that employees with up to 5.5 annual absence days reduced their days of absence by about 12%. Extended analyses suggest that in industries that enforced the cut, behavioral effects were about twice as large. We show that the direct labor cost savings effect stemming from the cut in replacement levels clearly exceeds the indirect effect due to the decrease in absenteeism. Our calculations about the total decrease in labor costs are very much in line with official data which suggest that total employer-provided sick pay decreased by 6.7% or €1.7 billion per year.     

Sexual exploitation of trafficked children: Survey evidence from child sex workers in Bangladesh

Human trafficking is a serious humanitarian problem. Using a nationally representative survey of Bangladeshi child sex workers and an instrumental variable model, we examine the working conditions of trafficked child sex workers and how they differ from those of nontrafficked child sex workers. We find that the victims trade sex with 190 percent more clients at a 67.8 percent lower wage and are more exposed to violence, leading to sickness, such as fever and headache. However, the differences in the prevalence of STDs and injury are insignificant presumably because the owners have an incentive to protect the victims from STDs. These findings suggest that evaluating sex workers’ working conditions by the prevalence of STDs alone may underestimate the severity of the exploitation of victims. Furthermore, conducting an empirical analysis without distinguishing between trafficked and nontrafficked workers, as performed in previous studies, leads to misunderstandings regarding the sex industry. We also contribute to the literature concerning the worst form of child labor by providing the first rigorous evidence of the working conditions of child sex workers. Finally, four implications for practitioners are discussed.     

How to tame two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation

We explore how the presence of direct democracy across hierarchical levels of government in a federation affects the level of public expenditure. In so doing we revisit the effect of direct democratic institutions on public policies. Particularly, we are interested whether the effect of upper-level (state) direct democratic institutions on lower-level expenditure varies with lower-level direct democracy. Empirically, we exploit the large institutional variation in the degree of direct democracy both for state (cantons) and local governments (municipalities) in Switzerland. Considering 119 municipalities belonging to 22 cantons for the period 1993–2007, we find that the cantonal fiscal referendum increases local spending for those municipalities without fiscal referenda, while this effect is significantly reduced for municipalities that also avail of referenda. This suggests that upper-level fiscal restraint can be undone by lower-level profligacy if direct-democratic control is limited to the upper level.     

Temporary Disability Insurance and Labor Supply: Evidence from a Natural Experiment*

Most developed countries have compulsory insurance programs for temporary disability, that is, cash benefits for non‐work‐related sickness. Despite the economic significance of these programs, little is known about their effects on work absenteeism or labor supply. We exploit a policy reform that consisted of the abolishment of a waiting day together with an increase of cash benefits for short sick leaves. We find that the total number of days of sickness absence was reduced by the reform, which is likely due to the fact that the abolishment of the waiting period made it less costly for workers to be absent for short periods.     

Fiscal rules to tame the political budget cycle: Evidence from Italian municipalities

The paper provides evidence that fiscal rules can limit the political budget cycle. It uses data on Italian municipalities during the 2000s and shows that: 1) municipalities are subject to political budget cycles in capital spending; 2) the Italian sub-national fiscal rule (Domestic Stability Pact, DSP) introduced in 1999 has been enforced by the central government; 3) municipalities subject to the fiscal rule show more limited political budget cycles than municipalities not subject to the rule. In order to identify the effect, we rely on the fact that the domestic fiscal rule does not apply to municipalities below 5000 inhabitants. We find that the political budget cycle increases real capital spending by about 10–20 percent on average in the years prior to municipal elections and that municipalities subject to the DSP show a pre-electoral increase in capital spending which is only a quarter of the one of municipalities not subject to the rule.     

Term limit extension and electoral participation. Evidence from a diff-in-discontinuities design at the local level in Italy

We study the effect of term limits on voter turnout in Italian local elections. Since 2014 the Italian law allows mayors in municipalities with a population size lower than 3,000 inhabitants to re-run for a third term, whereas mayors in cities with a number of residents above the cut-off still face a two-term limit. The introduction of the reform permits us to implement a difference-in-discontinuities design exploiting the before/after with the discontinuous policy change. We find that voters negatively react to the introduction of the reform: electoral participation decreases by about 5 percentage points in municipalities eligible to the treatment compared to municipalities in the control group. This negative effect is essentially driven by a decrease in the political competition. We also find that relaxing term limits does not improve the quality of politicians running for election.     

Do Employees’ Sickness Absences React to a Change in Costs for Firms? Evidence from a Natural Experiment*

We analyse the impact of a social security reform that changed the costs incurred by firms due to sickness absences. The reform abolished a compulsory insurance for firms, which insured them against the wages paid to sick blue-collar workers. During the first year after its introduction, we estimate that the reform resulted in about 6.3 percent fewer sickness absences, and in about 8.6 percent fewer absence days. We do not find evidence for changes in hiring or firing, and we find only limited workforce composition changes. We do not find spillover effects on the absences of white-collar workers. Robustness checks confirm these results.     

Social Behaviour in Work Absence*

By making use of a large‐scale randomized experiment, we test whether social behaviour is important for work absence due to illness. The individuals treated in the experiment were exposed to less monitoring of their eligibility to collect sickness insurance benefits, which sharply increased their non‐monitored work absence. This exogenous variation is exploited in two complementary analyses. In both analyses, we find significant social‐behaviour effects. Using detailed data, we conclude that the social‐behaviour effects most likely stem from fairness concerns.     

Cost savings in unit-based pricing of household waste: The case of The Netherlands

We estimate the effects of four unit-based pricing systems on waste collected in Dutch municipalities. Unit-based pricing is shown to be effective in reducing unsorted and compostable waste and in stimulating recyclable waste. If the estimations are corrected for differences in environmental activism between municipalities the effects are still large but significantly lower. The bag- and weight-based systems perform equally and far better compared with the frequency- and volume-based systems. This is interesting, as administrative costs are significantly lower for the bag-based system. Finally, unit-based pricing has no effect on the amounts of waste collected in surrounding municipalities.     

Productivity change of Portuguese municipalities after local reforms

This article examines the impact of the reforms introduced in the structure of the Portuguese local administration after the bailout agreement in 2011 on the efficiency and productivity of municipalities. In order to determine a measure of productivity change, we apply the global Malmquist productivity index to assess the performance of the 278 Portuguese mainland municipalities for the recent 6-year period 2009–2014. The overall results reveal that there was a decrease in the global productivity until 2013 followed by a notable increase in 2014 basically due to technological changes, thus it seems that the reforms have had a positive effect on the productivity of municipalities.     

The effects of inter-municipal cooperation and central grant allocation on the size of the French local public sector

The analysis of French municipalities’ public personnel expenditures allows us to study the issue of the size of the local public sector. We concentrate on two paths that French authorities have followed to limit it, i.e., the promotion of inter-municipal cooperation (IMC) and the cut in grants received by municipalities. Our objective is to evaluate their respective role in the evolution of public personnel expenditures at the municipal level, in a context where local politics comes into play. We consider a large panel dataset of municipalities embedded in IMC structures between 2011 and 2018. Our main results, obtained using an original identification strategy, are threefold. We first find evidence that a substitution effect between municipal and IMC personnel expenditures is at work. Second, we find a partisan distorsion through the grant allocation: despite its formula-based definition, aligned and unaligned municipalities are treated differently by the central government. Third, we show that cuts in grants lead to cuts in municipalities’ public wage bills, while partisanship hinders such cuts.     

Can gender quotas break down negative stereotypes? Evidence from changes in electoral rules

In this paper, we analyze the effect of gender quotas on women's involvement in political activity by using a rich data set providing information on all Italian local administrators who were elected from 1985 to 2007. Gender quotas were introduced by law in Italy in 1993 and were in force until 1995. Because of the short period covered by the reform, some municipalities never voted under the gender quota regime. This allows us to identify a treatment and a control group and to estimate the effects of gender quotas by using a difference-in-differences estimation strategy. Our estimates show that women's representation in politics after the reform increased significantly more in municipalities that were affected by the reform than in municipalities that were not affected. This result also holds true if we exclude from our analysis elections which took place during the period in which the reform was in force. Moreover, the higher women's representation in “gender quota municipalities” is not related to the advantages that women who were elected during the reform have obtained from incumbency and does not seem to be driven by differences in temporal trends between Southern and Northern regions. These findings suggest that affirmative actions can be of use in breaking down stereotypes against women.     

Who do you blame in local finance? An analysis of municipal financing in Italy

We study the effect of introducing a less transparent tax tool for the financing of local governments. A political agency model suggests that politicians with stronger re-electoral incentives would raise more tax revenues and use more the less transparent tax tool to enhance their probability of re-election. This prediction is tested by studying a reform that in 1999 allowed Italian municipalities to partially substitute a more accountable source of tax revenue (the property tax) with a less transparent one (a surcharge on the personal income tax of residents). Exploiting the existence of a term limit for mayors, we use a Difference in Difference approach, to estimate how mayors facing re-electoral concerns reacted to the introduction of the less transparent tax tool compared to mayors facing term limit. We find results in line with theory. We also show that the reduction in the property tax is larger in smaller municipalities and in municipalities with lower level of social capital. The normative implications are then discussed.     

Fiber deployment in Spain

Next generation access networks will be critical for future economic growth and access to these infrastructures will have major consequences for territorial and social cohesion. This paper examines the economic and competition determinants that serve as incentives for operators to invest in fiber-to-the-home technology. We draw on a dataset comprising 6603 Spanish municipalities with access to broadband services to examine the incumbent’s (Telefónica) deployment of fiber in the period 2010–2013. We show that local loop unbundling competition had a strong positive impact on Telefónica’s fiber deployment, while bitstream competition had a negative effect. Moreover, the incumbent was more likely to invest in municipalities with a large presence of cable operators. We also consider how the municipalities’ sociodemographic characteristics affected the operator’s deployment decision. While market size and population density had a positive effect on investment, the level of unemployment and the percentage of elderly population had a negative impact.