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Job Security and Work Absence: Evidence from a Natural Experiment

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  • Lindbeck, Assar

    ()
    (The Research Institute of Industrial Economics)

  • Palme, Mårten

    ()
    (Stockholm University)

  • Persson, Mats

    ()
    (Institute for International Economic Studies)

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 Research Institute of Industrial Economics in its series Working Paper Series with number 660.

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Length: 37 pages
Date of creation: 14 Feb 2006
Date of revision:
Handle: RePEc:hhs:iuiwop:0660

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Keywords: Seniority Rules; Sick Pay Insurance; Firing Costs; Moral Hazard;

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References

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  1. Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
  2. Ichino, Andrea & Maggi, Giovanni, 2000. "Work Environment And Individual Background: Explaining Regional Shirking Differentials In A Large Italian Firm," CEPR Discussion Papers 2387, C.E.P.R. Discussion Papers.
  3. Joshua Angrist, 1999. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Working papers 99-31, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. 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.
  5. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  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. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
  8. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  9. 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.
  10. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  11. 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.
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Cited by:
  1. Davis, Steven J. & Henrekson, Magnus, 2006. "Economic Performance and Work Activity in Sweden affter the Crisis of the early 1990s," Working Paper Series in Economics and Finance 647, Stockholm School of Economics, revised 12 Dec 2006.
  2. Nicolas R. Ziebarth, 2009. "Long-Term Absenteeism and Moral Hazard: Evidence from a Natural Experiment," SOEPpapers on Multidisciplinary Panel Data Research 172, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Olsson, Martin, 2007. "Employment Protection and Sickness Absence," Working Paper Series 717, Research Institute of Industrial Economics.
  4. Vincenzo Scoppa & Daniela Vuri, 2014. "Absenteeism, unemployment and employment protection legislation: evidence from Italy," IZA Journal of Labor Economics, Springer, vol. 3(1), pages 1-25, December.
  5. 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.
  6. 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.
  7. Bratberg, Espen & Monstad, Karin, 2012. "Worried Sick? Worker Responses To Organizational Turmoil," Working Papers in Economics 08/12, University of Bergen, Department of Economics.
  8. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Ratio Working Papers 150, The Ratio Institute.
  9. 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.
  10. Steven J. Davis & Magnus Henrekson, 2010. "Economic Performance and Market Work Activity in Sweden After the Crisis of the Early 1990s," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 225-252 National Bureau of Economic Research, Inc.
  11. Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.
  12. 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.
  13. 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.

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