COMPENSATION, SAFETY, AND ABSENTEEISM: EVIDENCE FROM THE PAPER INDUSTRY.

This paper develops an economic model of absenteeism and tests that model with data from a sample of establishments in the paper industry. Absenteeism is viewed as a desirable nonpecuniary element of the compensation package. The model, which is based upon the hedonic framework developed by Sherwin Rosen, focuses on the effects of wages, fringe benefits, and employment hazards on the long-run equilibrium absence rate of an establishment. The author finds that absence rates are significantly higher in paper plants with low wages and high occupational illness and injury rates, as predicted by the model. The impact of fringe benefits is less clear-cut both theoretically and empirically. The results suggest that work attendance plays an important part in labor market adjustment; studies that focus only on wage differences will underestimate the compensating differential for employment hazards, which includes increased absence rates as well as higher wages. [ABSTRACT FROM AUTHOR]