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

  • Larsson, Laura

    (SNS - Studieförbundet Näringsliv och Samhälle)

  • Runeson, Caroline

    ()

    (Institute for Labour Market Policy Evaluation)

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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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2007:8.

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Length: 32 pages
Date of creation: 14 Mar 2007
Date of revision:
Publication status: Published as Hartman, Laura and Caroline Hall, 'Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform' in Empirical Economics, 2010, pages 27-50.
Handle: RePEc:hhs:ifauwp:2007_008
Contact details of provider: Postal: IFAU, P O Box 513, SE-751 20 Uppsala, Sweden
Phone: (+46) 18 - 471 70 70
Fax: (+46) 18 - 471 70 71
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  1. van den Berg, Gerard J. & Lindeboom, Maarten & López, Marta, 2006. "Inequality in Individual Mortality and Economic Conditions Earlier in Life," IZA Discussion Papers 2425, Institute for the Study of Labor (IZA).
  2. Edin, P.-A. & Fredriksson, P., 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Papers 2000-19, Uppsala - Working Paper Series.
  3. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392 Elsevier.
  4. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
  5. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany.
  6. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  7. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2007. "Do reduced child care prices make parents work more?," Working Paper Series 2007:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
  9. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  10. Andersson, Christian, 2007. "Teacher density and student achievement in Swedish compulsory schools," Working Paper Series 2007:5, Uppsala University, Department of Economics.
  11. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  12. Ridder, G. & Tunali, I., 1997. "Stratified Partial Likelihood Estimation," Papers 1997/17, Koc University.
  13. Lawrence Katz & Bruce Meyer, 1988. "The Impact of the Potential Duration of Unemployment Benefits on the Duration of Unemployment," Working Papers 621, Princeton University, Department of Economics, Industrial Relations Section..
  14. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  15. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
  16. Larsson, Laura, 2004. "Harmonizing unemployment and sickness insurance: Why (not)?," Working Paper Series 2004:8, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  17. Laura Larsson, 2006. "Sick of Being Unemployed? Interactions between Unemployment and Sickness Insurance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 97-113, 03.
  18. 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.
  19. Andersson, Christian & Waldenström, Nina, 2007. "Teacher supply and the market for teachers," Working Paper Series 2007:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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