The Effect of Paid Sick Leave on Worker Absenteeism and Health Care Utilization

Despite the potential health and productivity benefits of providing paid sick leave to workers, most states and localities in the United States do not mandate that employers offer paid sick leave. This is in contrast to universal paid sick leave mandates in the majority of other high-income countries. Due in part to the historical lack of paid sick leave legislation, there are few studies on the effect of paid sick leave in the U.S. A few recent studies exploited the staggered implementation of state and local mandates to identify the causal effects of sick paid leave laws on employment and wages (for example, Callison and Pesko, 2016; Pichler and Ziebarth, 2018). However, there is a lot of variability across these state mandates in employer/employee eligibility requirements and the generosity of the benefits. The mixed findings in these studies mainly arise from differences in the construction of treatment and control groups, or the failure the fully account for selection.

In this paper, we estimate the short-term effects of paid sick leave on worker absenteeism and health care utilization in the U.S. using data from the 2000-2013 Medical Expenditure Panel Survey. In order to account for nonrandom selection into jobs that offer paid sick leave benefits, we use a difference-in-differences matching specification and estimate the treatment effect of paid sick leave separately for workers who gained paid sick leave and workers who lost paid sick leave. Unlike a standard matching estimator that relies on cross-sectional variation for identification (and could suffer from selection on unobservables), the difference-indifferences matching method accounts for selection along both observed and unobserved dimensions under a set of reasonable assumptions.

We find that losing paid sick leave benefits decreases the probability of taking sickness absence days among both male and female workers, but that gaining benefits increases absenteeism only among female workers. We also find that the probability of having an outpatient medical visit is higher among women who gain paid sick leave, suggesting that expanding paid sick leave to more women could be welfare improving.