Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Economics of Paid Sick Leave
Journal of Economic Perspectives
(pp. 215–42)
(Complimentary)
Abstract
This article examines the economics of paid sick leave from both theoretical and empirical perspectives. Research on paid sick leave has evolved dynamically over the last decade, primarily driven by the spread of US sick pay mandates, which have increased paid sick leave access from 63 percent to 77 percent in all US jobs. We begin by discussing the economic rationales for government regulation of paid sick leave, particularly the negative externalities associated with contagious diseases when individuals work while sick. After that, we discuss the key trade-offs in the general design of paid sick leave schemes, along with the trade-offs when setting specific policy parameters. Finally, we review economic modeling approaches to study optimal paid sick leave policies.Citation
Pichler, Stefan, Christopher Prinz, Stefan Thewissen, and Nicolas R. Ziebarth. 2026. "The Economics of Paid Sick Leave." Journal of Economic Perspectives 40 (2): 215–42. DOI: 10.1257/jep.20251479Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- I12 Health Behavior
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J32 Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- J83 Labor Standards: Workers' Rights
- M52 Personnel Economics: Compensation and Compensation Methods and Their Effects