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The Effect of Past Sickness on Current Earnings in Sweden

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  • Andrén, Daniela

    ()
    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Palmer, Edward

    ()
    (Uppsala University and The Swedish National Social Insurance Board)

Abstract

This paper examines whether sickness history affects annual earnings and/or hourly wages in Sweden, using a unique longitudinal database. If poor health makes people less productive, previous sickness is expected to have a negative effect on hourly wages. If poor health reduces people’s working capacity, but not their productivity, it is expected to decrease the hours worked, which implies lower annual earnings and no change in their hourly wage. The results indicate that people who are healthy in the current year but have a longer spell of sickness in previous years have lower earnings than persons who have no record of long-term sickness, and that the effect goes through hours of work rather than the wage rate. In addition, in the current year, sickness has a convex relationship with earnings, going through wages. Persons with lower (higher) wages have more (fewer) days of compensated absenteeism.

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File URL: http://hdl.handle.net/2077/2777
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 138.

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Length: 27 pages
Date of creation: 28 Jun 2004
Date of revision:
Handle: RePEc:hhs:gunwpe:0138

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: sickness history; reported hours of work; earnings and wage equations;

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References

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  1. Michael Grossman, 1999. "The Human Capital Model of the Demand for Health," NBER Working Papers 7078, National Bureau of Economic Research, Inc.
  2. Andrén, Daniela & Palmer, Edward, 2001. "The Effect Of Sickness On Earnings," Working Papers in Economics 45, University of Gothenburg, Department of Economics.
  3. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  4. Haveman, Robert & Wolfe, Barbara & Kreider, Brent & Stone, Mark, 1994. "Market work, wages, and men's health," Journal of Health Economics, Elsevier, vol. 13(2), pages 163-182, July.
  5. James W. Albrecht & Per-Anders Edin & Marianne Sundström & Susan B. Vroman, 1999. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 294-311.
  6. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  7. Thomas DeLeire & Willard Manning, 2004. "Labor market costs of illness: prevalence matters," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 239-250.
  8. Chirikos, Thomas N & Nestel, Gilbert, 1985. "Further Evidence on the Economic Effects of Poor Health," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 61-69, February.
  9. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, July.
  10. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  11. Edin, P.A. & Nynabb, J., 1992. "Gender Wage Differentials and Interrupted Work Careers : Swedish Evidence," Papers 1992-17, Uppsala - Working Paper Series.
  12. Theodore W. Schultz, 1960. "Capital Formation by Education," Journal of Political Economy, University of Chicago Press, vol. 68, pages 571.
  13. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
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