Sickness absence and unemployment revisited

In this paper we use administrative data from a sickness fund to estimate the relationship between sickness absence and unemployment. Previous research suggests that sickness absence is procyclical. However, we show that this largely depends on disease and employee characteristics. In line with our theoretical analysis employee characteristics affect incentives faced by individuals. In particular, we find large differences depending on whether workers change jobs. While workers who stay with the same employer reduce sickness absence during recessions, while workers switching employers reduce sickness absence during booms. Finally, contagious diseases appear to be the driver of procyclical sickness absence.