Sick of Being Unemployed? Interactions between Unemployment and Sickness Insurance

Authors

  • Laura Larsson

    1. Institute for Labor Market Policy Evaluation (IFAU), SE-751 20 Uppsala, Sweden
      laura.larsson@ifau.uu.se
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      I am grateful for comments from Kenneth Carling, Per-Anders Edin, Peter Fredriksson, Bertil Holmlund, Maarten Lindeboom, John Rust, Jeffrey Smith, and two anonymous referees. I especially thank Per Johansson for his programming help for the empirical analysis.


Abstract

This paper examines the incentive effects of interactions between unemployment insurance (UI) and sickness insurance (SI), two important components of Sweden's social insurance system. The main topic is how the sickness-report rate among the unemployed is affected by (i) the limit of 300 workdays for UI benefits, and (ii) the difference in maximum compensation between UI and SI benefits. Results obtained by duration analysis suggest that sick reports increase as the UI benefit expiration date approaches. There is also evidence of an incentive effect on the sick-report rate because SI offers higher compensation than UI.

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