The impact of downsizing on remaining workers' sickness absence

It is generally assumed that organizational downsizing has considerable negative consequences, not only for workers that are laid off, but also for those who remain employed. The empirical evidence with regard to effects on sickness absence is, however, inconsistent. This study employs register data covering a major part of the total workforce in Norway over the period 2000-2003. The number of sickness absence episodes and the number of sickness absence days are analysed by means of Poisson regression. To control for both observed and unobserved stable individual characteristics, we use conditional (fixed effects) estimation. The analyses provide some weak indications that downsizing may lead to slightly less sickness absence, but the overall impression is that downsizing has few if any effects on the sickness absence of the remaining employees.