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Keeping the Production Line Running: Internal Substitution and Employee Absence

Keeping the Production Line Running: Internal Substitution and Employee Absence <p>ABSTRACT:</p><p>We postulate that the production losses from absence depend on firms’ ability to internally substitute for absent workers, incentivizing firms to keep absence low in jobs with few substitutes. Using Swedish employer–employee data we show that absence is substantially lower in such positions conditional on establishment and occupation fixed effects. The result is driven by employee adjustments of absence to substitutability, and sorting of low (high) absence workers into (out of) positions with few substitutes. These findings highlight that internal substitution insures firms against production disruptions and that absence costs are important aspects of firms’ hiring and separation decisions.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resources University of Wisconsin Press

Keeping the Production Line Running: Internal Substitution and Employee Absence

Hensvik, Lena; Rosenqvist, Olof
Journal of Human Resources , Volume 54 (1) – Jan 14, 2019
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Publisher
University of Wisconsin Press
Copyright
©by the Board of Regents of the University of Wisconsin System
ISSN
1548-8004

Abstract

<p>ABSTRACT:</p><p>We postulate that the production losses from absence depend on firms’ ability to internally substitute for absent workers, incentivizing firms to keep absence low in jobs with few substitutes. Using Swedish employer–employee data we show that absence is substantially lower in such positions conditional on establishment and occupation fixed effects. The result is driven by employee adjustments of absence to substitutability, and sorting of low (high) absence workers into (out of) positions with few substitutes. These findings highlight that internal substitution insures firms against production disruptions and that absence costs are important aspects of firms’ hiring and separation decisions.</p>

Journal

Journal of Human Resources – University of Wisconsin Press

Published: Jan 14, 2019

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