Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223353 
Year of Publication: 
2020
Series/Report no.: 
ZEW Discussion Papers No. 20-040
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
This paper analyses the causal effects of weaker dismissal protection on the incidence of long-term sickness (> six weeks). We exploit a German policy change, which shifted the threshold exempting small establishments from dismissal protection from five to ten workers. Using administrative data, we find a significantly negative reform effect on transitions into long-term sickness in the second year after a worker has entered an establishment. This response is due to a behavioural, rather than a compositional effect and is particularly pronounced among medium-skilled males. Our results further indicate that the reform did not alter the probability of involuntary unemployment after sickness.
Subjects: 
dismissal protection
long-term sickness
involuntary unemployment
difference-in-differences
administrative data
small establishments
JEL: 
D02
I12
J28
J38
J88
J63
K31
Document Type: 
Working Paper

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