Absence Penalties and Work Attendance

This article extends previous economic treatments of the work attendance decision by providing a more complete specification of the absence penalty function. In particular, the penalty for absence is modelled as a function of both the opportunity cost of dismissal for excessive absence and the level of threat of dismissal chosen by management to control absence. Moreover, since the probability of dismissal is itself a function of the absence rate, a simultaneous system is posited. Strong support for the model is found in workplace‐level data collected as part of the 1989–90 Australian Workplace Industrial Relations Survey.