Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 45: THE EFFECT OF SICKNESS ON EARNINGS
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 40530 GÖTEBORG
Edward Palmer: Uppsala University and National Social Insurance Board, Postal: SE 103 51 Stockholm
Abstract: The question addressed in this paper is whether sickness history affects annual earnings and hourly wages in Sweden. If poor health makes people less productive, we expect to find a negative effect of previous health history on hourly wages. If, instead, poor health reduces people´s working capacity, but not their productivity, this implies only a decrease in hours worked. Using a longitudinal database for individual sickness, we estimate both (annual) earnings and (hourly) wage equations, and find that people who are healthy in the current year, but have long-term sickness in the previous five years have lower earnings than persons without long-term sickness.
Keywords: human capital model; age-earnings profiles; earnings; wage equations; sickness spells; health variables.
36 pages, May 23, 2001
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