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The effect of employer incentives in social insurance on individual wages

Author

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  • Vikström, Johan

    () (IFAU - Institute for Labour Market policy Evaluation)

Abstract

Several studies have documented that employer incentives, in form of experience rating, co-insurance or deductibles, could decrease the social insurance usage. Such employer incentives may though have unintended side effects, as it gives employers incentives to transfer the costs to their workers, affecting individual wages and inducing cream skimming. Side effects which have been given limited attention. This paper aims to fill one part of this gap in the literature. The effect off employer incentives on individual wages is estimated using a reform in January 1992, which introduced an employer co-insurance system into the Swedish sickness absence insurance. The analysis based on a long population panel database, including survey information on hourly wages, gives no support of any important individual wage effects from the co-insurance reform. This is not a result of lack of variation in individual wage increases, nor is it a result of large standard errors.

Suggested Citation

  • Vikström, Johan, 2009. "The effect of employer incentives in social insurance on individual wages," Working Paper Series 2009:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  • Handle: RePEc:hhs:ifauwp:2009_013
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    References listed on IDEAS

    as
    1. John W. Ruser, 1985. "Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 487-503, Winter.
    2. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-559, September.
    3. Anderson, Patricia M. & Meyer, Bruce D., 2000. "The effects of the unemployment insurance payroll tax on wages, employment, claims and denials," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 81-106, October.
    4. Goldman, Dana P. & Sood, Neeraj & Leibowitz, Arleen, 2005. "The reallocation of compensation in response to health insurance premium increases," Economics Letters, Elsevier, vol. 88(2), pages 147-151, August.
    5. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters,in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
    6. JÃrgen Hansen, 2000. "The effect of work absence on wages and wage gaps in Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(1), pages 45-55.
    7. Andrén, Daniela & Palmer, Edward, 2001. "The Effect Of Sickness On Earnings," Working Papers in Economics 45, University of Gothenburg, Department of Economics.
    8. Michael J. Moore & W. Kip Viscusi, 1989. "Promoting Safety through Workers' Compensation: The Efficacy and Net Wage Costs of Injury Insurance," RAND Journal of Economics, The RAND Corporation, vol. 20(4), pages 499-515, Winter.
    9. Deere, Donald R, 1991. "Unemployment Insurance and Employment," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 307-324, October.
    10. Pierre Koning, 2004. "Estimating the impact of experience rating on the inflow into disability insurance in the Netherlands," CPB Discussion Paper 37, CPB Netherlands Bureau for Economic Policy Analysis.
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    12. Ruser, John W, 1991. "Workers' Compensation and Occupational Injuries and Illnesses," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 325-350, October.
    13. Card, David & Levine, Phillip B., 1994. "Unemployment insurance taxes and the cyclical and seasonal properties of unemployment," Journal of Public Economics, Elsevier, vol. 53(1), pages 1-29, January.
    14. Bruce, Christopher J & Atkins, Frank J, 1993. "Efficiency Effects of Premium-Setting Regimes under Workers' Compensation: Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 38-69, January.
    15. S. Jurajda, 2004. "Recalls and unemployment insurance taxes," Applied Economics Letters, Taylor & Francis Journals, vol. 11(10), pages 651-656.
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    More about this item

    Keywords

    Wage; employer incentives; co-insurance; sickness absence; work absence; social insurance;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other

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