The Effect of Paid Vacation on Health: Evidence from Sweden

This study estimates the causal effect of receiving additional paid vacation days on health. Using register data on the universe of central government employees in Sweden, I exploit an age-based rule stipulated in the collective agreement covering these employees. Identification is achieved by combining a regression discontinuity with a difference-in-differences design to control for time-invariant differences between consecutive birth cohorts and isolate the true effect at two separate discontinuities at ages 30 and 40. The main results indicate no statistically significant changes in health (as proxied by specialized outpatient care visits, inpatient care admissions, and long-term sick leaves) induced by an extension of three paid vacation days at age 30 and four days at age 40. There is no evidence of significant effects by sex, being a (lone) parent, education level, or broad group of diagnoses. These findings challenge the historically grown health argument for additional paid vacation days.