Behavioral Effects of Probation Periods: An Analysis of Worker Absenteeism

This is the first study to provide robust empirical foundations to a theoretical literature which so far had to assume behavioral adjustments in response to probation periods. Probation periods typically precede regular employment contracts and are commonly interpreted as a screening device for employers. During probation employees have an incentive to behave according to the expectations of employers, because in this time they can easily be laid off. Also, salaries are frequently renegotiated after probation periods. Thus it is hypothesized that "bad" workers attempt to mimick "good" workers during probation. The incentive for such mimicking behavior disappears as soon as the probation period terminates and the formal employment contract is signed. At the example of absenteeism we evaluate whether behaviors change after the end of the probation period. We investigate a sample of newly hired employees and find large jumps in the predicted probability of absences after probation periods are completed. For white collar and public sector employees this is confirmed in the coefficient estimates, and for public sector employees the predicted probability of a work absence is even significantly higher after the probation period is completed. These results confirm the hypothesis of behavioral effects of probation periods and are robust to various changes in estimation methods.