Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 138: The Effect of Past Sickness on Current Earnings in Sweden
Daniela Andrén () and Edward Palmer ()
Additional contact information
Daniela Andrén: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Edward Palmer: Uppsala University and The Swedish National Social Insurance Board, Postal: Department of Economics., School of Economics and Commercial Law, Göteborg University, Box 640, SE 40530 GÖTEBORG
Abstract: This paper examines whether sickness history affects annual earnings and/or hourly wages in Sweden, using a unique longitudinal database. If poor health makes people less productive, previous sickness is expected to have a negative effect on hourly wages. If poor health reduces people’s working capacity, but not their productivity, it is expected to decrease the hours worked, which implies lower annual earnings and no change in their hourly wage. The results indicate that people who are healthy in the current year but have a longer spell of sickness in previous years have lower earnings than persons who have no record of long-term sickness, and that the effect goes through hours of work rather than the wage rate. In addition, in the current year, sickness has a convex relationship with earnings, going through wages. Persons with lower (higher) wages have more (fewer) days of compensated absenteeism.
Keywords: sickness history; reported hours of work; earnings and wage equations
27 pages, June 28, 2004
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