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Dismissal protection and long‐term sickness absence: Evidence from a policy change
Author(s) -
Gürtzgen Nicole,
Hiesinger Karolin
Publication year - 2025
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/irel.12375
Subject(s) - dismissal , term (time) , political science , economics , law , quantum mechanics , physics
Abstract This paper studies whether a decline in employment protection reduces workers' long‐term sickness absences (of >6 weeks). We exploit exogenous variation from a German policy change that shifted the threshold exempting small establishments from dismissal protection from 5 to 10 workers. Using German register data, we find that the reform significantly reduced employees' transitions into long‐term sickness during their second year after being hired. This response is due to a behavioral rather than a compositional effect and is particularly pronounced among the medium‐skilled and younger males. Further results indicate that the reform did not alter the probability of involuntary unemployment after sickness.