Scandinavian Working Papers in Economics

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

No 2009:13: The effect of employer incentives in social insurance on individual wages

Johan Vikström ()
Additional contact information
Johan Vikström: IFAU - Institute for Labour Market policy Evaluation, Postal: Box 513, SE-751 20 Uppsala, Sweden

Abstract: Several studies have documented that employer incentives, in form of experience rating, co-insurance or deductibles, could decrease the social insurance usage. Such employer incentives may though have unintended side effects, as it gives employers incentives to transfer the costs to their workers, affecting individual wages and inducing cream skimming. Side effects which have been given limited attention. This paper aims to fill one part of this gap in the literature. The effect off employer incentives on individual wages is estimated using a reform in January 1992, which introduced an employer co-insurance system into the Swedish sickness absence insurance. The analysis based on a long population panel database, including survey information on hourly wages, gives no support of any important individual wage effects from the co-insurance reform. This is not a result of lack of variation in individual wage increases, nor is it a result of large standard errors.

Keywords: Wage; employer incentives; co-insurance; sickness absence; work absence; social insurance

JEL-codes: C23; H55; I18; J39

37 pages, June 4, 2009

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