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Differences in Sick Leave Between Employed and Unemployed Workers. What Do They Tell Us About the Health Dimension of Unemployment?

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  • Thomas Leoni

    (WIFO)

Abstract

Unemployed workers suffer from poor health conditions, a fact which is documented by a large number of studies covering objective health measures, satisfaction with health status and mortality. This paper contributes to the literature with an empirical analysis of sick leave micro-data from Austrian social insurance agencies. The data represent an interesting source of information because in Austria both employed and unemployed workers are entitled to sickness benefits and both groups are subject to almost identical sick pay regulations. Aggregate statistics show that the unemployed spend close to 9 percent of their time on sick leave, against an average of 3.4 percent for the employed. Further evidence indicates that they report much longer illness spells and a higher number of hospitalisations. Both selection and causation effects can help to understand this large gap in health outcomes. Workers who become unemployed had markedly higher absence rates in employment than fellow workers who stay in employment. This difference, which can be interpreted as an approximation for the selection effect, accounts for roughly half of the observed gap in sick leave rates between the employed and the unemployed. On the other hand there exists a positive albeit non-linear relationship between sick leave and unemployment duration, corroborating the view that unemployment impacts health negatively. In accordance with previous studies I find that the unemployed suffer very often from mental disorders. Although women have a higher incidence of mental disorders than men in both employment and unemployment, it is unemployed men who experience the sharpest increase in mental problems in the wake of unemployment.

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Bibliographic Info

Paper provided by WIFO in its series WIFO Working Papers with number 372.

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Length: 54 pages
Date of creation: 11 Jun 2010
Date of revision:
Handle: RePEc:wfo:wpaper:y:2010:i:372

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Keywords: unemployment; sick leave; sickness; health; social insurance data;

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References

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  1. Arai, Mahmood & Skogman Thoursie, Peter, 2001. "Incentives and Selection in Cyclical Absenteeism," Working Paper Series 167, Trade Union Institute for Economic Research.
  2. Göran Kauermann & Renate Ortlieb, 2004. "Temporal pattern in number of staff on sick leave: the effect of downsizing," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 53(2), pages 355-367.
  3. Laura Romeu Gordo, 2006. "Effects of short- and long-term unemployment on health satisfaction: evidence from German data," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2335-2350.
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    • Josef Zweimüller & Rudolf Winter-Ebmer & Rafael Lalive & Andreas Kuhn & Jean-Philippe Wuellrich & Oliver Ruf & Simon Büchi, 2009. "Austrian social security database," IEW - Working Papers 410, Institute for Empirical Research in Economics - University of Zurich.
  7. Askildsen, Jan Erik & Bratberg, Espen & Nilsen, Øivind Anti, 2002. "Unemployment, labour force composition and sickness absence. A panel data study," Working Papers in Economics 05/02, University of Bergen, Department of Economics.
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  10. Barmby, Tim & Sessions, John G & Treble, John G, 1994. " Absenteeism, Efficiency Wages and Shirking," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(4), pages 561-66.
  11. Salm, M., 2009. "Does job loss cause ill health?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3736383, Tilburg University.
  12. Del Bono, Emilia & Weber, Andrea, 2006. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," IZA Discussion Papers 2242, Institute for the Study of Labor (IZA).
  13. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-On-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 122(4), pages 1511-1560, November.
  14. Gerdtham, Ulf-G. & Johannesson, Magnus, 2003. "A note on the effect of unemployment on mortality," Journal of Health Economics, Elsevier, vol. 22(3), pages 505-518, May.
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