@TechReport{iza:izadps:dp18853, author={Pichler, Stefan and Prinz, Christopher and Thewissen, Stefan and Ziebarth, Nicolas R.}, title={The Economics of Paid Sick Leave}, year={2026}, month={Aug}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={18853}, url={https://www.iza.org/index.php/publications/dp18853}, abstract={This article examines the economics of paid sick leave from both theoretical and empirical perspectives. Research on paid sick leave has evolved dynamically over the last decade, primarily driven by the spread of U.S. sick pay mandates, which have increased paid sick leave access from 63 percent to 77 percent in all U.S. jobs. We begin by discussing the economic rationales for government regulation of paid sick leave, particularly the negative externalities associated with contagious diseases when individuals work while sick. After that, we discuss the key trade-offs in the general design of paid sick leave schemes, along with the trade-offs when setting specific policy parameters. Finally, we review economic modeling approaches to study optimal paid sick leave policies.}, keywords={paid sick leave;statutory sickness insurance;medical leave;work disability;work incapacity;long-term absenteeism;presenteeism;paid time off;social insurance;externalities}, }