We show in this chapter how the demand for absence may be modelled either as a response to a fixed-hours contract, or as a consequence of shocks disturbing household production, or worker tastes. We consider how the models may be modified to include sick pay – either individual or group-based. Finally, we pursue two issues that arise: shocks to workers' ability to attend work (such as unreliable buses) and the impact on two-employee households of sick pay.

The allocation of time

For the most part, the literature on labour supply has created a bleak world for its decision-makers to inhabit. You probably would not wish to spend long in the company of the decision-makers themselves. Their home life, if it exists at all, is limited, their decisions (until quite recently) were independent of their nearest and dearest, and their consumption unidimensional. The literature has developed in this way for very good reasons, but the approach looks increasingly inadequate as a basis for understanding real-life decision-makers. The availability of increasingly detailed, complex data sets and of statistical methods of analysis has led to an interplay between theoretical developments and empirical practice, which is yielding new insights into the way in which households operate. At the same time, an increasingly rich theoretical description of household life is being created against which individual workers' relationships with the labour market can be analysed.