The Effects of the Complementary Sickness Benefits (CSB) on Sick Leave Duration: an Approach Based on Collective Bargaining Agreements

In France, wage-replacement benefits that cover employee absences due to illness are financed via a three-tier system. The first tier includes per diem sickness benefits paid by the National Health Insurance scheme. The second tier consists of complementary private insurance coverage provided by the employer with respect to collective bargaining agreements. The third-tier is managed at the firm level and will not be addressed in this paper. This study is the first to examine the effects of the second tier. It aims at empirically estimating the effects of the level of complementary sickness benefits on the duration of sick leave spells. This level provides employees with complementary coverage that can significantly exceed basic benefit rates, but there are wide disparities between employee categories that can affect waiting times, benefit duration or even wage replacement rates. We use first an extremely detailed description of the allowance parameters for the 46 most representative collective agreements and second, the HYGIE database, a unique source of individual information on sick leaves, enriched with collective agreement allowance parameters. A piecewise constant discrete time proportional hazard model is estimated for all individuals in the sample according to socio-professional category, taking into account unobserved individual heterogeneity in order to test the effects of both the global level of allowance and its day by day marginal effects. The estimations confirm the effect of individual variables previously studied: gender, age, health status, “department” (sub-region), and year of establishment. Besides, the level of collective agreement provisions has a very significant and negative effect on the likelihood of leaving the sickness absence state. This effect varies according to the sub-period of sickness absence taken into account. It is also stronger among non-executive employees than among executives.