Josep Amer Mestre (JRC)
Manuel Serrano-Alarcon
This paper investigates the factors contributing to the current sharp rise in sick leave prevalence occurring in many developed countries, using Spain as a case study. Using individual-level Social Security data for 2018-2023, we examine the evolution of days on sick leave across worker and job characteristics and implement an Oaxaca-Blinder decomposition to quantify each factor's contribution to the increase. We document a 36% increase in the share of days on sick leave, a trend common to a wide range of demographic and job characteristics. Observable factors such as population ageing, increasing employment opportunities, or longer healthcare waiting times account for only about 26\% of the rise. Short- and long-term sick leaves show distinct patterns: over 60% of the rise in short absences is attributable to falling unemployment, consistent with behavioural responses in periods of economic expansion, whereas 90% of the growth in long absences remains unexplained by observable factors. Musculoskeletal and mental health conditions account for the largest increase, with mental health being particularly important for the under 40, explaining between 35% and 56% of the rise in days lost. Regional panel data models show that long-term mental and musculoskeletal sick leave rates are significantly associated with increased work stress and pain-related limitations, suggesting that genuine health deterioration is contributing to the surge in long-term sick leaves. Our results highlight a concerning deterioration in mental health among the younger workforce with broader consequences for both workers, employers and the welfare system.