and Caroline Runeson
Laura Larsson: SNS - Studieförbundet Näringsliv och Samhälle, Postal: SNS , Jakobsbergsgatan 18 , Box 5629 , S-114 86 Stockholm, Sweden
Caroline Runeson: Institute for Labour Market Policy Evaluation, Postal: Box 513, SE-751 20 Uppsala, Sweden
Abstract: This paper looks at a specific type of moral hazard that arises in the interplay between two large public insurance systems in Sweden, namely the sickness insurance (SI) and the unemployment insurance (UI). Moral hazard can arise from the benefit size structure as for some unemployed persons, benefits from the SI are higher than benefits from the UI. We use a reform of the SI system that came in force 1 July, 2003, to identify the effect of economic incentives arising from the different benefit sizes. Our results from a duration analysis show clearly that the higher the benefits, the larger the probability of reporting sick.
32 pages, March 14, 2007
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