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Moral hazard and sickness insurance: Empirical evidence from a sickness insurance reform in Sweden

Author

Listed:
  • Johansson, Per

    (IFAU - Institute for labour market policy evaluation)

  • Palme, Mårten

    (Stockholm University)

Abstract

We use a reform of Sweden’s sickness insurance system as a source of exogenous variation to analyse the presence of moral hazard. As a result of the reform, the replacement level was reduced from 90 percent of forgone earnings to 65 percent for the first three days; to 80 percent between day 4 and 90; and remained at 90 percent after 90 days. We find that the incidence of work absence decreased due to the decrease in compensation level and that effect on duration is in accordance with moral hazard in the sickness insurance. We estimate the elasticities of the incidence with respect to forgone earning to -1 for males and -0.70 for females.

Suggested Citation

  • 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.
    • Handle: RePEc:hhs:ifauwp:2004_010
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    File URL: http://www.ifau.se/upload/pdf/se/2004/wp04-10.pdf
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    References listed on IDEAS

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    Cited by:

    1. Andrén, Daniela & Granlund, David, 2010. ""Waiting for the other shoe to drop": waiting for health care and duration of sick leave," Umeå Economic Studies 814, Umeå University, Department of Economics.
    2. 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.
    3. Ulrike Famira-Mühlberger & Ulrike Huemer & Christine Mayrhuber, 2015. "Der Einfluss der sozialen Sicherungssysteme auf die Beschäftigungsquote Älterer in traditionellen Wohlfahrtsstaaten," WIFO Working Papers 499, WIFO.
    4. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.

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    More about this item

    Keywords

    Worker absenteeism; Cox proportional hazard models; regression-discontinuity;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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