Employee health and firm performance
Author: Daniel Rettl (University of Georgia), Alexander Schandlbauer (University of Southern Denmark) and Mircea Trandafir (University of Southern Denmark)
Title: Employee health and firm performance
Abstract: When workers are in bad health, their productivity declines. We investigate whether the health of employees affects firm performance, taking advantage of the severity of the seasonal influenza seasons as a source of exogenous variation in health. We find that firms located in areas particularly affected by influenza experience reductions in their return on assets and in net income. These results are not driven by firm-specific characteristics, as we find the same relationship between influenza severity and firm performance within firms, at the establishment level. We also document substantial heterogeneity in the effects, with small firms and labor-intensive firms driving our findings. This suggests that labor is an important driver of firm performance and that capital-intensive and larger firms are better able to shift resources in response to temporary shocks to their workforce.