The Effects of Sick-Leaves on Earnings

This paper assesses the causal effect of sick-leaves on subsequent earnings using an administrative dataset for Norway linking individual earnings, sick-leave records and primary care physicians. The leniency of a worker's physician - certifying sickness absence - is used as instrument for sick-leaves. Sick-leaves have a substantial impact on future earnings, reducing earnings by .3 percent per day of absence. When conditioning on full-time employment also two years after sickness the effect is .06 percent per day of absence. These effects are persistent over time and work mainly through wages not hours.