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

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  • Caroline Hall

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  • Laura Hartman

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Abstract

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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Suggested Citation

  • Caroline Hall & Laura Hartman, 2010. "Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform," Empirical Economics, Springer, vol. 39(1), pages 27-50, August.
  • Handle: RePEc:spr:empeco:v:39:y:2010:i:1:p:27-50
    DOI: 10.1007/s00181-009-0293-7
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Johansson, Per & Pekkarinen, Tuomas & Verho, Jouko, 2014. "Cross-border health and productivity effects of alcohol policies," Journal of Health Economics, Elsevier, vol. 36(C), pages 125-136.
    2. Per Johansson & Erica Lindahl, 2013. "Can sickness absence be affected by information meetings? Evidence from a social experiment," Empirical Economics, Springer, vol. 44(3), pages 1673-1695, June.
    3. Barbara Hofmann, 2014. "Sick of being “Activated?”," Empirical Economics, Springer, vol. 47(3), pages 1103-1127, November.
    4. Gerard Van Den Berg & Antoine Bozio & Monica Costa Dias, 2013. "Policy discontinuity and duration outcomes," IFS Working Papers W13/27, Institute for Fiscal Studies.
    5. van den Berg, Gerard J. & Hofmann, Barbara & Uhlendorff, Arne, 2016. "The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions," IZA Discussion Papers 9626, Institute for the Study of Labor (IZA).
    6. Caroline Hall, 2011. "Do Interactions between Unemployment Insurance and Sickness Insurance Affect Transitions to Employment?," LABOUR, CEIS, vol. 25(4), pages 447-467, December.
    7. René Böheim & Thomas Leoni, 2014. "Firms' Sickness Costs and Workers' Sickness Absences," NBER Working Papers 20305, National Bureau of Economic Research, Inc.
    8. Anders, Forslund & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series, Center for Labor Studies 2010:3, Uppsala University, Department of Economics.
    9. Persson, Malin, 2011. "Substitution between temporary parental leave and sickness absence," Working Paper Series 2011:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    10. Michael Wiberg & Staffan Marklund & Kristina Alexanderson, 2017. "Transitions Between Compensated Work Disability, Joblessness, and Self-Sufficiency: A Cohort Study 1997–2010 of Those Jobless in 1995," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 36(1), pages 85-107, February.
    11. Forslund, Anders, 2009. "Labour supply incentives, income support systems and taxes in Sweden," Working Paper Series 2009:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    12. Andersen, Torben M. & Haagen Pedersen, Lars, 2008. "Distribution and labour market incentives in the welfare state – Danish experiences," Working Paper Series 2008:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    Unemployment insurance; Sickness insurance; Health; Duration analysis;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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