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A Tale of Two Continents: Insuring Workers Against Loss of Income Due to Sickness in North America and Europe

Published online by Cambridge University Press:  26 March 2020

John Treble
John Treble*
Affiliation:
Swansea University
*
e-mail: [email protected]
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Abstract

Sick pay has been debated recently in several economies, including the US, Germany and Sweden. There is, however, little academic discussion of the nature of sick pay, or of how it should be structured. This paper clears the ground for such a discussion in two ways; it identifies a conceptual difference between the North American model, rooted in job protection, and the European model, which is predominantly a form of social insurance. Secondly, it argues that experience-rated sick pay provided by employers avoids the classical problems of insurance markets. US-style paid sick leave is an example of such a scheme.

Keywords

Sick paysick leavemoral hazardadverse selectionoptimal insuranceoptimal sortingJ3J32J33J38
Type
Articles
Information
National Institute Economic Review , Volume 209 , July 2009 , pp. 116 - 125
Copyright
Copyright © 2009 National Institute of Economic and Social Research

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Footnotes

∗

Many conversations have contributed facts and arguments to this paper. Tim Barmby, Melvyn Coles, Rado Vadovic and Denise Drummond have made many useful suggestions. Ron Oaxaca first piqued my interest in the US institutions. Even a short conversation with Richard Freeman is enough to put things into a new perspective. Price Fishback should bear joint responsibility for footnote 3, but I hereby absolve him and anyone else for any errors that may appear here.

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