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Sickness Absence and Search Unemployment

  • Bertil Holmlund

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.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-06/cesifo1_wp1227.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1227.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1227
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  1. Boone, Jan & Fredriksson, Peter & Holmlund, Bertil & van Ours, Jan C, 2001. "Optimal Unemployment Insurance with Monitoring and Sanctions," CEPR Discussion Papers 3082, C.E.P.R. Discussion Papers.
  2. Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Seminar Papers 697, Stockholm University, Institute for International Economic Studies.
  3. Broström, Göran & Palme, Mårten & Johansson, Per, 2002. "Economic incentives and gender differences in work absence behavior," Working Paper Series 2002:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Christopher J. Flinn & James J. Heckman, 1982. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," NBER Working Papers 0979, National Bureau of Economic Research, Inc.
  5. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
  6. 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.
  7. Garibaldi, Pietro & Wasmer, Etienne, 2001. "Labor Market Flows and Equilibrium Search Unemployment," IZA Discussion Papers 406, Institute for the Study of Labor (IZA).
  8. Johansson, Per & Palme, Mårten, 2001. "Assessing the effect of public policy on worker absenteeism," Working Paper Series 2002:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Stephen Nickell & D. Nicolitsas, 1994. "Wages," LSE Research Online Documents on Economics 51644, London School of Economics and Political Science, LSE Library.
  10. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
  11. Ehrenberg, Ronald G, 1970. "Absenteeism and the Overtime Decision," American Economic Review, American Economic Association, vol. 60(3), pages 352-57, June.
  12. Allen, Steven G, 1981. "An Empirical Model of Work Attendance," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 77-87, February.
  13. Andrea Ichino & Regina T. Riphahn, 2001. "The Effect of Employment Protection on Worker Effort. A Comparison of Absenteeism During and After Probation," CESifo Working Paper Series 596, CESifo Group Munich.
  14. Barmby, T A & Orme, C D & Treble, John G, 1991. "Worker Absenteeism: An Analysis Using Microdata," Economic Journal, Royal Economic Society, vol. 101(405), pages 214-29, March.
  15. 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.
  16. Johansson, Per & Palme, Marten, 1996. "Do economic incentives affect work absence? Empirical evidence using Swedish micro data," Journal of Public Economics, Elsevier, vol. 59(2), pages 195-218, February.
  17. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
  18. 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.
  19. Hesselius, Patrik, 2003. "Does Sick Absence Increase the Risk of Unemployment?," Working Paper Series 2003:15, Uppsala University, Department of Economics.
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