[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1999
Kiel Working Paper 935
Sickness benefit ineome reduces an employee's opportunity costs of absence from work. In the Federal Republic of Germany the institutional arrangement was changed several times during the 1951-1998 period. This paper investigates the effects on sick leave behavior. According to the empirical analysis, moral hazard is a serious problem in Germany. The paper discusses some institutional changes which would significantly reduce moral hazard.