This paper looks at a specific type of moral hazard that arises in the interplay between two large public insurance systems in Sweden, namely the sickness insurance (SI) and the unemployment insurance (UI). Moral hazard can arise from the benefit size structure as for some unemployed persons, benefits from the SI are higher than benefits from the UI. We use a reform of the SI system that came in force 1 July, 2003, to identify the effect of economic incentives arising from the different benefit sizes. Our results from a duration analysis show clearly that the higher the benefits, the larger the probability of reporting sick.
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Paper provided by IFAU - Institute for Labour Market Policy Evaluation in its series Working Paper Series with number
2007:8.
Length: 32 pages Date of creation: 14 Mar 2007 Date of revision: Handle: RePEc:hhs:ifauwp:2007_008
Contact details of provider: Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden Phone: (+46) 18 - 471 70 70 Fax: (+46) 18 - 471 70 71 Email: Web page: http://www.ifau.se/ More information through EDIRC
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Find related papers by JEL classification: C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health 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
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