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

  • Johansson, Per

    ()

    (IFAU - Institute for labour market policy evaluation)

  • Palme, Mårten

    ()

    (Stockholm University)

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.

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2004:10.

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Length: 29 pages
Date of creation: 23 Aug 2004
Date of revision:
Handle: RePEc:hhs:ifauwp:2004_010
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Phone: (+46) 18 - 471 70 70
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  1. Barmby, Tim & Orme, Chris & Treble, John, 1995. "Worker absence histories: a panel data study," Labour Economics, Elsevier, vol. 2(1), pages 53-65, March.
  2. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
  3. Arai, Mahmood & Thoursie, Peter Skogman, 2005. "Incentives and selection in cyclical absenteeism," Labour Economics, Elsevier, vol. 12(2), pages 269-280, April.
  4. 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.
  5. Alan B. Krueger & Bruce D. Meyer, 2002. "Labor Supply Effects of Social Insurance," NBER Working Papers 9014, National Bureau of Economic Research, Inc.
  6. Paringer, Lynn, 1983. "Women and Absenteeism: Health or Economics?," American Economic Review, American Economic Association, vol. 73(2), pages 123-27, May.
  7. 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.
  8. 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.
  9. Ridder, G. & Tunali, I., 1997. "Stratified Partial Likelihood Estimation," Papers 1997/17, Koc University.
  10. Thomas Aronsson & James R. Walker, 1997. "The Effects of Sweden's Welfare State on Labor Supply Incentives," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 203-266 National Bureau of Economic Research, Inc.
  11. Palme, Mårten & Svensson, Ingemar, 1997. "Social Security, Occupational Pensions, and Retirement in Sweden," SSE/EFI Working Paper Series in Economics and Finance 184, Stockholm School of Economics.
  12. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  13. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
  14. Pierre André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory: A Survey of Some Recent Work," CESifo Working Paper Series 738, CESifo Group Munich.
  15. 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.
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