Casey Swings and Misses
http://www.cepr.net/index.php/cepr-blog/
October 28, 2009
By John Schmitt, CEPR Senior Economist
University of Chicago economist Casey Mulligan has a post today
[http://economix.blogs.nytimes.com/2009/10/28/home-sick-another-case-wherwork-incentives-matter/]
at the New York Times Economix blog where he seems to argue that the
current push for statutory paid sick days in the United States is
ignoring the role of economic incentives. According to Mulligan, workers
in countries with generous paid sick day policies stay home because of
"incentives, and not the flu".
I don't think Mulligan has been following the U.S. debate on paid sick
days very closely. The U.S. debate is very serious about incentives. The
current system --which does not require employers to provide paid sick
days and leaves upwards of 50 million workers without paid sick days--
gives strong incentives to workers to go to work sick, lowering
productivity and potentially spreading illness. [See
http://economix.blogs.nytimes.com/2009/10/28/home-sick-another-case-wherwork-incentives-matter/]
Of course, offering paid sick days also gives workers incentives to take
time off when they are not sick. But, there is nothing in Mulligan's
post that says where we should set the optimal level. He doesn't even
make a case that the most generous systems in Europe are too generous,
just that they lead to more sickness absences in some cases. For all we
know, after we factor in the cost of contagious diseases, the most
generous European systems might still be too stingy.
To make his point about the effect of incentives, Mulligan features the
following graph from a recent IMF paper
[http://www.imf.org/External/Pubs/FT/staffp/2007/03/pdf/lusinyan.pdf]:
[Casey Mulligan graph on sickness absences
see http://www.cepr.net/index.php/cepr-blog/]
Mulligan, however, has made very selective use of the original IMF graph:
[IMF graph on sickness absences
see http://www.cepr.net/index.php/cepr-blog/]
In the original, Denmark, Germany, and seven other countries with more
generous statutory paid sick days policies all have lower sickness
absence rates than the United States. A really interesting question is:
how is it that these countries are able to provide both guaranteed paid
sick days and lower sickness absence rates? (And why didn't Mulligan
include these countries in his graph?)
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Nicole Woo
Director of Domestic Policy
Center for Economic and Policy Research (CEPR)
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