This paper uses government-mandated conditional random assignment of patients to doctors to calculate a leniency measure of paid sick leave. We link these data to information on the human capital development of the patients' children. We find sizable negative effects of parental sick leave take-up on the child's human capital development across the entire educational system; from GPA in primary school to enrollment in higher education. In addition, we show that the timing of parental take-up of these programs matter. In terms of mechanisms, we find that sick leave has negative long-term effects on parental earnings and makes parents increasingly dependent on the social insurance system. The results highlight that the trade-off between employment protection and work incentives extends well beyond the individual worker, and emphasizes another dimension of the home environment through which children's human capital is shaped.
Alexander Willén, Barton Willage, and Julie Riise
