Sick leave accumulation: theory and empirical evidence

Abstract

This dissertation is an attempt to explain sick leave accumulation. The problem is approached with the traditional consumer maximization model where the individual faces an income and a time constraint. Sick leave enters the utility function as a mode by which the consumer chooses his expected value of future income. Thus, sick leave may be accumulated, thereby increasing the expected value of future income, or expended, thereby financing a present time consuming activity. The demand for accumulated sick leave is derived, including selected exogenous variables as arguments. By means of simple comparative statics, each parameter is examined, and its effects on the accumulation of sick leave are analyzed. Empirical analysis is utilized, using the observed behavior of some 690 individuals employed by the U.S. Postal Service. In general, the observed behavior of these Postal employees conforms to the behavioral pattern prescribed in the theoretical model. A significant proportion of the variation in the accumulation of sick leave is explained by changes in the wage rate, selected prices, the beginning stocks of sick leave and annual leave and the consumer's age.