Sickness Absence and Business Cycles

Abstract

Absenteeism is affected by the sickness benefit system. Countries with generous compensation during sick leaves also experience high numbers of sick leave. Sick leaves may vary over the business cycle due to unemployment disciplining effects or changes in labour force composition. The latter hypothesis maintains that sickness may be pro-cyclical due to employment of `marginal' workers with poorer health when demand increases. Using individual records of labour force participants in Norway, we investigate the explanatory factors behind differing spells of work absence at different stages of the business cycle. We find no indication that new entrants explain increases in absence, on the other hand workers who stay in the labour force increase absences when the economy improves. Thus there is some evidence that unemployment has a disciplining effect.