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Do Interactions between Unemployment Insurance and Sickness Insurance Affect Transitions to Employment?

  • Caroline Hall

Previous research suggests that there are substantial interactions between the unemployment insurance (UI) and the sickness insurance (SI) in Sweden. Moral hazard arises in the interplay between these two social insurance systems, since by reporting sick an unemployed person can postpone the UI expiration date and sometimes also receive considerably higher benefits. This paper examines whether these interactions affect the transition rate from unemployment to employment. To study this question I utilize a reform which greatly reduced the incentives for unemployed persons to transfer to the SI. While there is evidence that this reform substantially lowered the incidence of sick reports among the unemployed, I find no evidence suggesting that the reduced sick report rate in turn affected the transition rate to employment

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File URL: http://hdl.handle.net/10.1111/j.1467-9914.2011.00532.x
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Article provided by CEIS in its journal LABOUR.

Volume (Year): 25 (2011)
Issue (Month): 4 (December)
Pages: 447-467

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Handle: RePEc:bla:labour:v:25:y:2011:i:4:p:447-467
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  1. Larsson, Laura & Runeson, Caroline, 2007. "Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform," Working Paper Series 2007:8, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Engström, Per & Holmlund, Bertil, 2005. "Worker Absenteeism in Search Equilibrium," Working Paper Series 2005:22, Uppsala University, Department of Economics.
  3. Kenneth Carling & Bertil Holmlund & Altin Vejsiu, 2000. "Do Benefit Cuts Boost Job Findings? Swedish Evidence From the 1990s," CESifo Working Paper Series 365, CESifo Group Munich.
  4. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, . "The Effect of Benefit Sanctions on the Duration of Unemployment," IEW - Working Papers 110, Institute for Empirical Research in Economics - University of Zurich.
  5. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
  6. Laura Larsson, 2006. "Sick of Being Unemployed? Interactions between Unemployment and Sickness Insurance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 97-113, 03.
  7. Lawrence Katz & Bruce Meyer, 1988. "The Impact of the Potential Duration of Unemployment Benefits on the Duration of Unemployment," Working Papers 621, Princeton University, Department of Economics, Industrial Relations Section..
  8. Pellizzari, Michele, 2006. "Unemployment duration and the interactions between unemployment insurance and social assistance," Labour Economics, Elsevier, vol. 13(6), pages 773-798, December.
  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. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  11. Brown, Sarah & Sessions, John G, 1996. " The Economics of Absence: Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 10(1), pages 23-53, March.
  12. Jaap H. Abbring & Gerard J. Berg & Jan C. Ours, 2005. "The Effect of Unemployment Insurance Sanctions on the Transition Rate from Unemployment to Employment," Economic Journal, Royal Economic Society, vol. 115(505), pages 602-630, 07.
  13. Larsson, Laura, 2004. "Harmonizing unemployment and sickness insurance: Why (not)?," Working Paper Series 2004:8, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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