<p>ABSTRACT:</p><p>We postulate that the production losses from absence depend on firmsâ ability to internally substitute for absent workers, incentivizing firms to keep absence low in jobs with few substitutes. Using Swedish employerâemployee 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 firmsâ hiring and separation decisions.</p>
Journal of Human Resources – University of Wisconsin Press
Published: Jan 14, 2019
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