Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2007:16: Incentive and spill-over effects of supplementary sickness compensation

Patrik Hesselius () and Malin Persson ()
Additional contact information
Patrik Hesselius: IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Malin Persson: Department of Economics, Uppsala University, Postal: Box 513, SE-751 20 Uppsala, Sweden

Abstract: In 1998 the Swedish national sickness insurance policy changed to allow additional compensation from e.g. collective agreements after the 90th day of absence without a reduction of the public sickness benefit. We estimate the effects of this policy change on the duration of sickness absence for employees in the municipal sector. After the change in policy, this group received 10 percentage points additional compensation during day 91 to 360 in a sick leave. The results indicate that durations of at least 91 days increased by 4.7 days on average. As a consequence, the cost for the national sickness insurance increased by 3.0 percent. For the supplementary insurance to cover its total cost, insurance premiums should be increased by 22 percent.

Keywords: Social insurance; sickness absence; collective agreements

JEL-codes: H51; H55; I38; J22

26 pages, June 19, 2007

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