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Moral hazard and sickness insurance: Empirical evidence from a sickness insurance reform in Sweden

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Author Info

  • Johansson, Per

    ()
    (IFAU - Institute for labour market policy evaluation)

  • Palme, Mårten

    ()
    (Stockholm University)

Abstract

We use a reform of Sweden’s sickness insurance system as a source of exogenous variation to analyse the presence of moral hazard. As a result of the reform, the replacement level was reduced from 90 percent of forgone earnings to 65 percent for the first three days; to 80 percent between day 4 and 90; and remained at 90 percent after 90 days. We find that the incidence of work absence decreased due to the decrease in compensation level and that effect on duration is in accordance with moral hazard in the sickness insurance. We estimate the elasticities of the incidence with respect to forgone earning to -1 for males and -0.70 for females.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2004:10.

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Length: 29 pages
Date of creation: 23 Aug 2004
Date of revision:
Handle: RePEc:hhs:ifauwp:2004_010

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Postal: IFAU, P O Box 513, SE-751 20 Uppsala, Sweden
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Keywords: Worker absenteeism; Cox proportional hazard models; regression-discontinuity;

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References

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  1. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  2. Pierre-André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory : A Survey of Some Recent Work," Working Papers 2002-11, Centre de Recherche en Economie et Statistique.
  3. Marten Palme & lngemar Svensson, 1999. "Social Security, Occupational Pensions, and Retirement in Sweden," NBER Chapters, in: Social Security and Retirement around the World, pages 355-402 National Bureau of Economic Research, Inc.
  4. Ridder, Geert & Tunali, Insan, 1999. "Stratified partial likelihood estimation," Journal of Econometrics, Elsevier, vol. 92(2), pages 193-232, October.
  5. Barmby, Tim & Orme, Chris & Treble, John, 1995. "Worker absence histories: a panel data study," Labour Economics, Elsevier, vol. 2(1), pages 53-65, March.
  6. 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.
  7. Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Working Paper Series in Economics and Finance 0444, Stockholm School of Economics, revised 08 Aug 2001.
  8. Paringer, Lynn, 1983. "Women and Absenteeism: Health or Economics?," American Economic Review, American Economic Association, vol. 73(2), pages 123-27, May.
  9. 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.
  10. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
  11. Barmby, Tim & Orme, Chris D & Treble, John, 1990. "Worker Absenteeism: An Analysis Using Microdata," CEPR Discussion Papers 434, C.E.P.R. Discussion Papers.
  12. Alan B. Krueger & Bruce D. Meyer, 2002. "Labor Supply Effects of Social Insurance," NBER Working Papers 9014, National Bureau of Economic Research, Inc.
  13. Thomas Aronsson & James R. Walker, 1997. "The Effects of Sweden's Welfare State on Labor Supply Incentives," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 203-266 National Bureau of Economic Research, Inc.
  14. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  15. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
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Cited by:
  1. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  2. Andrén, Daniela & Granlund, David, 2010. ""Waiting for the other shoe to drop": waiting for health care and duration of sick leave," UmeÃ¥ Economic Studies 814, Umeå University, Department of Economics.
  3. Caroline Hall & Laura Hartman, 2010. "Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform," Empirical Economics, Springer, vol. 39(1), pages 27-50, August.
  4. Zuriah Abdul Rahman, 2010. "Adverse selection and its consequences on medical and health insurance and takaful in Malaysia," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 26(4), pages 264-283, September.

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