Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 12

A recent study concluded that many employees fake sickness to avoid going to work. The authors argue that through unwarranted sick leave, employees "steal" about $150 billion a year from firms. This amount is three times larger than the estimated loss from shoplifting. One proposal is for Congress to outlaw the granting of sick leave to employees. The argument is that companies would be much better off because they would not incur the giant losses associated with sick leave. Further, the costs of taking sick leave would be internalized with the employees. Comment on this proposal.