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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 444:
The Effects on Sick Leave of Changes in the Sickness Insurance System

Magnus Henrekson () and Mats Persson ()

Abstract: In order to get a more complete picture of how labor supply is affected by economic incentives, the effects on absenteeism and not just on contracted hours should be taken into account. In particular, absenteeism due to sick leave can be considerable. In this paper we examine whether the level of sick leave compensation affects sick leave behavior. Using time-series data for Sweden spanning a long period (195599) with numerous changes of the compensation level, we generally find strong effects of the expected sign. Reforms implying more generous compensation for sick leave tend to be associated with permanent increases in total sick leave per person employed and vice versa. These findings are reinforced in a panel study covering the 198391 period.

Keywords: Absenteeism; Labor supply; Sick leave; Sickness insurance; Social security; (follow links to similar papers)

JEL-Codes: H55; I38; J22; (follow links to similar papers)

27 pages, May 16, 2001, Revised March 18, 2003

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This paper is published as:
Henrekson, Magnus and Mats Persson, (2004), 'The Effects on Sick Leave of Changes in the Sickness Insurance System', Journal of Labor Economics, Vol. 22, January, No. 1, pages 87-113



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