Not coming in today - firm productivity differentials and the epidemiology of the flu

With more than four million cases in Germany every year, influenza and acute upper respiratory tract infectious diseases (henceforth URTI) exhibit the highest number of reported doctor consultations. Although the direct treatment costs for URTI are comparably low, the indirect economic costs, due to work absences and productivity impairments of sick workers who remain at work (presentism), are far more compelling. In this paper, we estimate the effect of local URTI incidences as an exogenous shock to the production factor labor and thus on firm productivity. To quantify the URTI related shock on the production factor labor, we scrape a large number of weekly maps depicting the (local) URTI index across Germany, which are provided in the official influenza surveillance system. Measured by the length of the influenza season in German municipalities from 2003 to 2009, these data exhibit substantial seasonal as well as regional variation. In our main analysis, we estimate firm level production functions using data from the IAB Establishment Panel, a comprehensive German firm survey. In our main regression, we analyze total factor productivity differentials and their relationship with the local influenza intensity. We find sizeable negative effects of the URTI diseases on firm productivity. We attribute this effect to a combination of direct productivity losses caused by absences of sickworkers as well as indirect productivity impairments due to presenteeism.