Are workers less absent when wage dispersion is small?
International Journal of Manpower
Article publication date: 3 May 2016
The purpose of this paper is to examine the impact of wage dispersion on sickness absenteeism observed in Belgian firms.
The authors use detailed linked employer-employee panel data for the period 1999-2006 that allow the authors to compute a conditional wage dispersion indicator following the Winter-Ebmer and Zweimüller (1999) methodology and to estimate the relationship between sickness absenteeism and wage dispersion while controlling for time-invariant workplace characteristics.
The authors find a positive and hump-shaped relationship between intra-firm wage dispersion and sickness absenteeism, the turning point of this relation being extremely high. In addition, the magnitude of the influence of wage dispersion on sickness absenteeism is found to be stronger in firms employing a larger share of blue-collar workers.
The results could therefore suggest that wage dispersion, suggestive of larger pay-for-performance mechanisms, decreases worker satisfaction and the workplace climate in general. Only a minority of workers, who are less sensitive to equity and cohesion considerations, would be less absent as pay-for-performance increases.
While numerous approaches analyse the link between wage dispersion and firm productivity, very few studies we are aware of are devoted to the relationship between wage dispersion and sickness absenteeism. Yet, the outcomes in terms of productivity and sickness absenteeism may be different. Furthermore, the influence of wage dispersion on sickness absenteeism does not seem unambiguous from a theoretical point of view. To the authors knowledge, it is the first time that this relation is analysed with Belgian data.
The authors would like to thank two anonymous referees for useful comments and suggestions on an earlier version of this paper. They are also most grateful to participants of the 63rd Annual Meeting of the French Economic Association (Lyon, June 2014) for their helpful comments and Statistics Belgium for giving access to the data. Any remaining errors are the authors’ responsibility.
Mahy, B., Rycx, F. and Volral, M. (2016), "Are workers less absent when wage dispersion is small?", International Journal of Manpower, Vol. 37 No. 2, pp. 197-209. https://doi.org/10.1108/IJM-01-2015-0004
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