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Sickness Absence and Search Unemployment

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  • Bertil Holmlund

Abstract

The paper presents a model that allows a unified analysis of sickness absence and search unemployment. Sickness appears as random shocks to individual utility functions, interacts with individual searchand labor supply decisions and triggers movements across labor force states. The employed worker prefers absence for sufficiently severe sickness and the unemployed worker may prefer nonparticipation if the disutility of search is amplified by sickness. The decisions governing labor force transitions are influenced by social insurance benefits available for sick or unemployed workers. We examine how these benefits affect individual decisions on absence and search and the implications for employment, unemployment and nonparticipation. The normative analysis of the socially optimal benefit structure suggests that there is, in general, a case for benefit di.erentiation across states of non-work. In particular, there is a case for a benefit structure that rewards active job search.

Suggested Citation

  • Bertil Holmlund, 2004. "Sickness Absence and Search Unemployment," CESifo Working Paper Series 1227, CESifo.
  • Handle: RePEc:ces:ceswps:_1227
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sören Blomquist & Vidar Christiansen, 2008. "Taxation and Heterogeneous Preferences," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(2), pages 218-244, June.
    2. Davide Furceri & Aleksandra Zdzienicka, 2012. "The Effects of Social Spending on Economic Activity: Empirical Evidence from a Panel of OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 33(1), pages 129-152, March.
    3. Österholm, Pär, 2004. "Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods," Working Paper Series 2004:13, Uppsala University, Department of Economics.
    4. Darby, Julia & Melitz, Jacques, 2007. "Labour Market Adjustment, Social Spending and the Automatic Stabilizers in the OECD," CEPR Discussion Papers 6230, C.E.P.R. Discussion Papers.
    5. Per Engström & Bertil Holmlund, 2007. "Worker Absenteeism in Search Equilibrium," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 439-467, September.
    6. Oliver Röhn Rigmar Osterkamp, 2005. "Being on Sick Leave – Possible Explanations for Differences of Sick-leave Days Across Countries Privatization," ifo Working Paper Series 19, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Per Engström & Bertil Holmlund, 2005. "Worker Absenteeism in Search Equilibrium," CESifo Working Paper Series 1607, CESifo.

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    More about this item

    Keywords

    sickness absence; search; unemployment; sickness benefits; unemployment benefits;
    All these keywords.

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