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Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform

  • Caroline Hall

    ()

  • Laura Hartman

    ()

This paper looks at a specific type of moral hazard that arises in the interplay between two large public insurance systems in Sweden, namely the sickness insurance (SI) and the unemployment insurance (UI). Moral hazard can arise from the benefit size structure as for some unemployed persons, benefits from the SI are higher than benefits from the UI. We use a reform of the SI system that came in force 1 July, 2003, to identify the effect of economic incentives arising from the different benefit sizes. Our results from a duration analysis show clearly that the higher the benefits, the larger the probability of reporting sick.

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File URL: http://hdl.handle.net/10.1007/s00181-009-0293-7
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 39 (2010)
Issue (Month): 1 (August)
Pages: 27-50

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Handle: RePEc:spr:empeco:v:39:y:2010:i:1:p:27-50
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  1. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  2. van den Berg, Gerard J. & Lindeboom, Maarten & López, Marta, 2006. "Inequality in Individual Mortality and Economic Conditions Earlier in Life," IZA Discussion Papers 2425, Institute for the Study of Labor (IZA).
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  6. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  7. Puhani P-A., 2010. "The Treatment Effect, the Cross Difference, and the Interaction Term in Nonlinear “Difference-in-Differences” Models," Working Papers ERMES 1004, ERMES, University Paris 2.
  8. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany.
  9. 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.
  10. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000:19, Uppsala - Working Paper Series.
  11. 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.
  12. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2007. "Do reduced child care prices make parents work more?," Working Paper Series 2007:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  13. Johansson, Per & Palme, Mårten, 2004. "Moral hazard and sickness insurance: Empirical evidence from a sickness insurance reform in Sweden," Working Paper Series 2004:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  14. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  15. Andersson, Christian & Waldenström, Nina, 2007. "Teacher supply and the market for teachers," Working Paper Series 2007:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  16. 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.
  17. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392 Elsevier.
  18. Andersson, Christian, 2007. "Teacher density and student achievement in Swedish compulsory schools," Working Paper Series 2007:5, Uppsala University, Department of Economics.
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