The effect of paid vacation on health: evidence from Sweden
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The effect of paid vacation on health: evidence from Sweden Thomas Hofmarcher1,2 Received: 16 May 2019 / Accepted: 6 July 2020 / © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This study estimates the causal effect of paid vacation on health. Using register data on the universe of central government employees in Sweden, I exploit an age-based rule stipulated in the collective agreement covering these employees. I achieve identification by combining a regression discontinuity with a difference-in-differences design to control for time-invariant differences between consecutive birth cohorts and isolate the true effect at two separate discontinuities at ages 30 and 40. The main results indicate that an increase of three paid vacation days at age 30 and four days at age 40 do not cause significant changes in health, as proxied by visits to specialized outpatient care, inpatient admissions, and long-term sick leaves. These findings challenge the anecdotal view of additional paid vacation days as an adequate means to improve workers’ health. Keywords Health · Vacation · Holiday · Annual leave · Working time JEL Classification I18 · J22 · J81 · M52
1 Introduction Paid vacation, denoting the vacation leave to which a worker is entitled in a year, and paid annual leave1 have become the target of policy makers during the Great
1 Paid annual leave is the sum of paid vacation days and paid public holidays. Whereas paid public holidays (e.g., May Day) typically take place on the same date every year, a worker can more or less freely distribute paid vacation days across the year. Whether workers stay at home or travel while on vacation is not considered in this study. Responsible editor: Shuaizhang Feng
Thomas Hofmarcher
[email protected] 1
IHE - The Swedish Institute for Health Economics, Box 2127, SE-22002 Lund, Sweden
2
Centre for Economic Demography, Lund University, Box 7080, SE-22007 Lund, Sweden
T. Hofmarcher
Recession. Indeed, several countries have made cuts in a bid to stimulate the economy and increase competitiveness.2 Workers’ health represented at best a secondary concern in all of these decisions. This is surprising from a historical viewpoint, as it contradicts the main argument based on which paid vacation was introduced and extended around the world. The earliest labor market regulations mandating paid vacation date back to the 1930s and were mainly intended to maintain and protect workers’ health. In Sweden, the country considered in this study, the first statutory regulation on vacation entitlement was implemented in 1931 as part of the Occupational Safety Act, and in 1938 turned into a fully fledged law that emphasized the importance of vacation for workers’ physical and mental health (SOU 2001). Over time, mandated vacation entitlements have become increasingly more generous.3 In 1993, the Council of the European Union adopted the so-called Working Time Directive (93/104/EC), which required all member states to introduce, inter alia, at least 4 weeks of paid vacation
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