When Bonuses Backfire: How Incentivizing Attendance Increases Absenteeism in the Workplace

Abstract: Absenteeism in the workplace entails economic consequences of considerable magnitude. Yet, evidence regarding the effectiveness of potential instruments that firms may employ in order to curb excessive absenteeism is scarce. We conduct a firm level field experiment (RCT) in collaboration with a retail chain and introduce two variants of an attendance bonus, which we randomly assign among the firm’s apprentices. While one group of apprentices receives a monetary bonus, another group receives a time-off bonus in the form of additional days of vacation. A third group serves as the control group. Our analyses reveal that neither of the two bonus variants serves to reduce absenteeism. Instead, we find that the monetary attendance bonus even tends to increase the probability of absence, notably for the cohort of first year apprentices. The time-off bonus, on the other hand, does not appear to systematically affect attendance behavior at all. The results of a comprehensive survey suggest that the monetary attendance bonus relaxes the apprentices' psychological costs of absence.