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Sickness Absence and Search Unemployment

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Author Info
Bertil Holmlund ()

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Abstract

The paper presents a model that allows a unified analysis of sickness absence and search unemployment. Sickness appears as random shocks to individual utility functions, interacts with individual searchand labor supply decisions and triggers movements across labor force states. The employed worker prefers absence for sufficiently severe sickness and the unemployed worker may prefer nonparticipation if the disutility of search is amplified by sickness. The decisions governing labor force transitions are influenced by social insurance benefits available for sick or unemployed workers. We examine how these benefits affect individual decisions on absence and search and the implications for employment, unemployment and nonparticipation. The normative analysis of the socially optimal benefit structure suggests that there is, in general, a case for benefit di.erentiation across states of non-work. In particular, there is a case for a benefit structure that rewards active job search.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1227.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1227

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Related research
Keywords: sickness absence; search; unemployment; sickness benefits; unemployment benefits;

Other versions of this item:

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Boone, Jan & Fredriksson, Peter & Holmlund, Bertil & van Ours, Jan, 2002. "Optimal unemployment insurance with monitoring and sanctions," Working Paper Series 2002:21, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
    Other versions:
  2. Broström, Göran & Palme, Mårten & Johansson, Per, 2002. "Economic incentives and gender differences in work absence behavior," Working Paper Series 2002:14, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  3. Johansson, Per & Palme, Mårten, 2001. "Assessing the effect of public policy on worker absenteeism," Working Paper Series 2002:13, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  4. Barmby, Tim & Orme, Chris D & Treble, John, 1990. "Worker Absenteeism: An Analysis Using Microdata," CEPR Discussion Papers 434, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Hesselius, Patrik, 2003. "Does Sick Absence Increase the Risk of Unemployment?," Working Paper Series 2003:15, Uppsala University, Department of Economics. [Downloadable!]
  6. James J. Heckman & Christopher J. Flinn, 1982. "New Methods for Analyzing Structural Models of Labor Force Dynamics," NBER Working Papers 0856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. 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. [Downloadable!] (restricted)
  8. Ehrenberg, Ronald G, 1970. "Absenteeism and the Overtime Decision," American Economic Review, American Economic Association, vol. 60(3), pages 352-57, June.
  9. Garibaldi, Pietro & Wasmer, Etienne, 2001. "Labor Market Flows and Equilibrium Search Unemployment," IZA Discussion Papers 406, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Brown, Sarah & Sessions, John G, 1996. " The Economics of Absence: Theory and Evidence," Journal of Economic Surveys, Blackwell Publishing, vol. 10(1), pages 23-53, March.
  11. Askildsen, Jan Erik & Bratberg, Espen & Nilsen, Øivind Anti, 2002. "Unemployment, labour force composition and sickness absence. A panel data study," Working paper Series 0205, Department of Economics, University of Bergen. [Downloadable!]
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  12. Ichino, Andrea & Riphahn, Regina T., 2001. "The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation," IZA Discussion Papers 385, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 28-42, January. [Downloadable!] (restricted)
    Other versions:
  14. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April. [Downloadable!] (restricted)
    Other versions:
  15. Allen, Steven G, 1981. "An Empirical Model of Work Attendance," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 77-87, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Österholm, Pär, 2004. "Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods," Working Paper Series 2004:13, Uppsala University, Department of Economics. [Downloadable!]
  2. Blomquist, Sören & Christiansen, Vidar, 2004. "Taxation and Heterogeneous Preferences," Working Paper Series 2004:9, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  3. Darby, Julia & Mélitz, Jacques, 2007. "Labour Market Adjustment, Social Spending and the Automatic Stabilizers in the OECD," CEPR Discussion Papers 6230, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Per Engström & Bertil Holmlund, 2005. "Worker Absenteeism in Search Equilibrium," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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