IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v60y2019icp84-98.html
   My bibliography  Save this article

Forward-looking moral hazard in social insurance

Author

Listed:
  • Eliason, Marcus
  • Johansson, Per
  • Nilsson, Martin

Abstract

This study tests for forward-looking moral hazard in the sickness insurance system by exploiting a 1991 reform in Sweden. The replacement rate was reduced for short absences but not for long absences, which introduced a potential future cost of returning to work. Using this exogenous variation in the replacement rate and controlling for dynamic selection, we find that the potential future cost of returning to work decreased the outflow from long-term sickness absence. This finding suggests that long-term sickness absentees respond to economic incentives and are forward-looking, which highlights the importance of taking forward-looking behavior into account when designing and evaluating social insurance programs.

Suggested Citation

  • Eliason, Marcus & Johansson, Per & Nilsson, Martin, 2019. "Forward-looking moral hazard in social insurance," Labour Economics, Elsevier, vol. 60(C), pages 84-98.
    • Handle: RePEc:eee:labeco:v:60:y:2019:i:c:p:84-98
    DOI: 10.1016/j.labeco.2019.06.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537119300594
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.labeco.2019.06.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gerard J. van den Berg & Antoine Bozio & Mónica Costa Dias, 2020. "Policy discontinuity and duration outcomes," Quantitative Economics, Econometric Society, vol. 11(3), pages 871-916, July.
    2. Jan Erik Askildsen & Espen Bratberg & Øivind Anti Nilsen, 2005. "Unemployment, labor force composition and sickness absence: a panel data study," Health Economics, John Wiley & Sons, Ltd., vol. 14(11), pages 1087-1101, November.
    3. Pierpaolo Pierani & Silvia Tiezzi, 2011. "Infrequency of Purchase, Individual Heterogeneity and Rational Addiction in Single Households’ Estimates of Alcohol Consumption," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 70(2), pages 93-116, July.
    4. Ziebarth, Nicolas R. & Karlsson, Martin, 2010. "A natural experiment on sick pay cuts, sickness absence, and labor costs," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1108-1122, December.
    5. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1261-1303.
    6. Nicolas R. Ziebarth & Martin Karlsson, 2014. "The Effects Of Expanding The Generosity Of The Statutory Sickness Insurance System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 208-230, March.
    7. Angelov, Nikolay & Johansson, Per & Lindahl, Erica, 2013. "Gender differences in sickness absence and the gender division of family responsibilities," Working Paper Series, Center for Labor Studies 2013:5, Uppsala University, Department of Economics.
    8. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark Cullen, 2012. "Moral hazard in health insurance: How important is forward looking behavior?," Discussion Papers 11-007, Stanford Institute for Economic Policy Research.
    9. Judith Chevalier & Austan Goolsbee, 2009. "Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1853-1884.
    10. Alpert, Abby, 2016. "The anticipatory effects of Medicare Part D on drug utilization," Journal of Health Economics, Elsevier, vol. 49(C), pages 28-45.
    11. Maria De Paola & Vincenzo Scoppa & Valeria Pupo, 2014. "Absenteeism in the Italian Public Sector: The Effects of Changes in Sick Leave Policy," Journal of Labor Economics, University of Chicago Press, vol. 32(2), pages 337-360.
    12. Markussen, Simen & Røed, Knut & Røgeberg, Ole J. & Gaure, Simen, 2011. "The anatomy of absenteeism," Journal of Health Economics, Elsevier, vol. 30(2), pages 277-292, March.
    13. Jason Abaluck & Jonathan Gruber & Ashley Swanson, 2015. "Prescription Drug Use under Medicare Part D: A Linear Model of Nonlinear Budget Sets," NBER Working Papers 20976, National Bureau of Economic Research, Inc.
    14. Magnus Henrekson & Mats Persson, 2004. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 87-114, January.
    15. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark Cullen, 2015. "Moral Hazard in Health Insurance: Do Dynamic Incentives Matter?," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 725-741, October.
    16. Johansson, Per & Palme, Marten, 1996. "Do economic incentives affect work absence? Empirical evidence using Swedish micro data," Journal of Public Economics, Elsevier, vol. 59(2), pages 195-218, February.
    17. Aaviksoo, Evelyn & Kiivet, Raul Allan, 2016. "Influence of the sickness benefit reform on sickness absence," Health Policy, Elsevier, vol. 120(9), pages 1070-1078.
    18. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
    19. Liran Einav & Amy Finkelstein & Paul Schrimpf, 2015. "The Response of Drug Expenditure to Nonlinear Contract Design: Evidence from Medicare Part D," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 841-899.
    20. Puhani, Patrick A. & Sonderhof, Katja, 2010. "The effects of a sick pay reform on absence and on health-related outcomes," Journal of Health Economics, Elsevier, vol. 29(2), pages 285-302, March.
    21. Ziebarth, Nicolas R., 2013. "Long-term absenteeism and moral hazard—Evidence from a natural experiment," Labour Economics, Elsevier, vol. 24(C), pages 277-292.
    22. Paringer, Lynn, 1983. "Women and Absenteeism: Health or Economics?," American Economic Review, American Economic Association, vol. 73(2), pages 123-127, May.
    23. David Autor & Mark Duggan & Jonathan Gruber, 2014. "Moral Hazard and Claims Deterrence in Private Disability Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 110-141, October.
    24. Per Johansson & Mårten Palme, 2002. "Assessing the Effect of Public Policy on Worker Absenteeism," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 381-409.
    25. Cameron M. Kaplan & Yuting Zhang, 2017. "Anticipatory Behavior in Response to Medicare Part D's Coverage Gap," Health Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 338-351, March.
    26. Per Pettersson-Lidbom & Peter Skogman Thoursie, 2013. "Temporary Disability Insurance and Labor Supply: Evidence from a Natural Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 485-507, April.
    27. Silvia Tiezzi, 2005. "An empirical analysis of tobacco addiction in Italy," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 6(3), pages 233-243, September.
    28. Long, Stephen H. & Marquis, M. Susan & Rodgers, Jack, 1998. "Do people shift their use of health services over time to take advantage of insurance?," Journal of Health Economics, Elsevier, vol. 17(1), pages 105-115, January.
    29. Christina M. Dalton & Gautam Gowrisankaran & Robert Town, 2015. "Salience, Myopia, and Complex Dynamic Incentives: Evidence from Medicare Part D," NBER Working Papers 21104, National Bureau of Economic Research, Inc.
    30. Catherine Pollak, 2017. "The impact of a sick pay waiting period on sick leave patterns," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(1), pages 13-31, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastien Menard, 2021. "Optimal sickness benefits in a principal–agent model," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(1), pages 5-33, July.
    2. Johansson, Naimi & de New, Sonja C. & Kunz, Johannes S. & Petrie, Dennis & Svensson, Mikael, 2023. "Reductions in out-of-pocket prices and forward-looking moral hazard in health care demand," Journal of Health Economics, Elsevier, vol. 87(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eliason, Marcus & Johansson, Per & Nilsson, Martin, 2018. "Forward-looking moral hazard in social insurance: evidence from a natural experiment," Working Paper Series 2018:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    2. Carlo Alberto Biscardo & Alessandro Bucciol & Paolo Pertile, 2019. "Job sick leave: Detecting opportunistic behavior," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 373-386, March.
    3. Stefan Pichler & Nicolas R. Ziebarth, 2015. "The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Shirking Behavior," Discussion Papers of DIW Berlin 1509, DIW Berlin, German Institute for Economic Research.
    4. Pichler, Stefan & Ziebarth, Nicolas R., 2017. "The pros and cons of sick pay schemes: Testing for contagious presenteeism and noncontagious absenteeism behavior," Journal of Public Economics, Elsevier, vol. 156(C), pages 14-33.
    5. Ziebarth, Nicolas R., 2013. "Long-term absenteeism and moral hazard—Evidence from a natural experiment," Labour Economics, Elsevier, vol. 24(C), pages 277-292.
    6. Pichler, Stefan & Ziebarth, Nicolas R., 2015. "The Pros and Cons of Sick Pay Schemes: A Method to Test for Contagious Presenteeism and Shirking Behavior," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112940, Verein für Socialpolitik / German Economic Association.
    7. Sebastien Menard, 2021. "Optimal sickness benefits in a principal–agent model," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(1), pages 5-33, July.
    8. Stijn Baert & Bas van der Klaauw & Gijsbert van Lomwel, 2018. "The effectiveness of medical and vocational interventions for reducing sick leave of self‐employed workers," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 139-152, February.
    9. Ziebarth, Nicolas R. & Karlsson, Martin, 2010. "A natural experiment on sick pay cuts, sickness absence, and labor costs," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1108-1122, December.
    10. Nicolas R. Ziebarth & Martin Karlsson, 2014. "The Effects Of Expanding The Generosity Of The Statutory Sickness Insurance System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 208-230, March.
    11. Aaviksoo, Evelyn & Kiivet, Raul Allan, 2016. "Influence of the sickness benefit reform on sickness absence," Health Policy, Elsevier, vol. 120(9), pages 1070-1078.
    12. Kieu‐Dung Nguyen & Van‐AnhThi Tran & Duc‐Thanh Nguyen, 2021. "Social insurance reform and absenteeism in Vietnam," International Journal of Social Welfare, John Wiley & Sons, vol. 30(2), pages 193-207, April.
    13. Pichler, Stefan & Ziebarth, Nicolas R., 2019. "Reprint of: The pros and cons of sick pay schemes: Testing for contagious presenteeism and noncontagious absenteeism behavior," Journal of Public Economics, Elsevier, vol. 171(C), pages 86-104.
    14. René Böheim & Thomas Leoni, 2014. "Firms' Sickness Costs and Workers' Sickness Absences," NBER Working Papers 20305, National Bureau of Economic Research, Inc.
    15. Jakob Alfitian & Dirk Sliwka & Timo Vogelsang, 2021. "When Bonuses Backfire: Evidence from the Workplace," Natural Field Experiments 00725, The Field Experiments Website.
    16. Pichler, Stefan & Ziebarth, Nicolas R., 2024. "Sick Leave and Medical Leave in the United States: A Categorization and Recent Trends," IZA Policy Papers 206, Institute of Labor Economics (IZA).
    17. Halima, Mohamed Ali Ben & Koubi, Malik, 2022. "The effects of expanding the generosity of statutory sick leave insurance: The case of a French reform," Health Policy, Elsevier, vol. 126(3), pages 216-223.
    18. Stefan Pichler & Nicolas R. Ziebarth, 2020. "Labor Market Effects of U.S. Sick Pay Mandates," Journal of Human Resources, University of Wisconsin Press, vol. 55(2), pages 611-659.
    19. Halla, Martin & Pech, Susanne & Zweimüller, Martina, 2015. "The Effect of Statutory Sick Pay Regulations on Workers' Health," IZA Discussion Papers 9091, Institute of Labor Economics (IZA).
    20. Martin Ljunge, 2011. "Sick of Taxes? Evidence on the Elasticity of Labor Supply when Workers Are Free to Choose," Discussion Papers 11-27, University of Copenhagen. Department of Economics.

    More about this item

    Keywords

    Dynamic incentives; Forward-looking behavior; Moral hazard; Sickness absence; Sickness insurance;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:60:y:2019:i:c:p:84-98. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.