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Job Security and Work Absence: Evidence form a Natural Experiment

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Author Info

  • Lindbeck, Assar

    ()
    (Institute for International Economic Studies, Stockholm University)

  • Palme, Mårten

    ()
    (Department of Economics)

  • Persson, Mats

    ()
    (Institute for International Economic Studies, Stockholm University)

Abstract

We analyze the consequences for sickness absence of a selective softening of job security legislation for small firms in Sweden in 2001. According to our differences-in-difference estimates, aggregate absence in these firms fell by 0.2-0.3 days per year. This aggregate net figure hides important effects on different groups of employees. Workers remaining in the reform firms after the reform reduced their absence by about one day. People with a high absence record tended to leave reform firms, but these firms also became less reluctant to hire people with a record of high absence.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 743.

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Length: 37 pages
Date of creation: 01 Feb 2006
Date of revision:
Handle: RePEc:hhs:iiessp:0743

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: Seniority rules; sick pay insurance; firing costs; moral hazard;

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References

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  1. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  2. Andrea Ichino & Giovanni Maggi, 1999. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," NBER Working Papers 7415, National Bureau of Economic Research, Inc.
  3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  4. Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
  5. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working Papers 780, Princeton University, Department of Economics, Industrial Relations Section..
  6. Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Seminar Papers 697, Stockholm University, Institute for International Economic Studies.
  7. Joshua D. Angrist, 2000. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," NBER Technical Working Papers 0248, National Bureau of Economic Research, Inc.
  8. Andrea Ichino & Regina T. Riphahn, 2001. "The Effect of Employment Protection on Worker Effort. A Comparison of Absenteeism During and After Probation," CESifo Working Paper Series 596, CESifo Group Munich.
  9. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  10. Solveig Osborg Ose & Jan Morten Dyrstad, 2001. "Non-linear Unemployment Effects in Sickness Absence: Discipline or Composition Effects?," Working Paper Series 2502, Department of Economics, Norwegian University of Science and Technology.
  11. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
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Citations

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Cited by:
  1. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Working Paper Series 820, Research Institute of Industrial Economics.
  2. Steven J. Davis & Magnus Henrekson, 2006. "Economic Performance and Work Activity in Sweden after the Crisis of the Early 1990s," NBER Working Papers 12768, National Bureau of Economic Research, Inc.
  3. Bratberg, Espen & Monstad, Karin, 2012. "Worried Sick? Worker Responses To Organizational Turmoil," Working Papers in Economics 08/12, University of Bergen, Department of Economics.
  4. Davis, Steven J. & Henrekson, Magnus, 2007. "Economic Perfomance and Market Work Activity in Sweden after the Crisis of the Early 1990s," Working Paper Series 687, Research Institute of Industrial Economics.
  5. Olsson, Martin, 2009. "Employment protection and sickness absence," Labour Economics, Elsevier, vol. 16(2), pages 208-214, April.
  6. von Below, David & Thoursie, Peter, 2008. "Last in, first out? Estimating the effect of seniority rules in Sweden," Working Paper Series 2008:27, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  7. Vincenzo Scoppa & Daniela Vuri, 2013. "Absenteeism, Unemployment and Employment Protection Legislation: Evidence from Italy," CEIS Research Paper 257, Tor Vergata University, CEIS, revised 07 Jan 2013.
  8. Jahangir Khan & Clas Rehnberg, 2009. "Perceived job security and sickness absence: a study on moral hazard," The European Journal of Health Economics, Springer, vol. 10(4), pages 421-428, October.
  9. Ziebarth, Nicolas R., 2013. "Long-term absenteeism and moral hazard—Evidence from a natural experiment," Labour Economics, Elsevier, vol. 24(C), pages 277-292.
  10. Bjuggren, Carl Magnus, 2013. "The Effect of Employment Protection Rules on Firm Productivity - A Natural Experiment," HUI Working Papers 82, HUI Research, revised 30 Oct 2013.
  11. Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2014. "Employment Protection Legislation and Firm Growth: Evidence from a Natural Experiment," HUI Working Papers 102, HUI Research.
  12. von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.
  13. Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.

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