Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1051: Sickness Absence and Local Benefit Cultures

Assar Lindbeck (), Mårten Palme () and Mats Persson ()
Additional contact information
Assar Lindbeck: Research Institute of Industrial Economics (IFN), Postal: and Institute for International Economic Studies, Stockholm University, Stockholm, Sweden
Mårten Palme: Department of Economics, Postal: Stockholm University, Stockholm, Sweden
Mats Persson: Institute for International Economic Studies, Postal: Stockholm University, Stockholm

Abstract: In many countries, sickness absence financed by generous insurance benefits is an important concern in the policy debate. There are strong variations in absence behavior among local geographical areas. Such variations are difficult to explain in terms of observable socioeconomic factors. In this paper, we investigate whether such variations are related to group effects in the form of social interaction among individuals within neighborhoods. Well-known methodological problems arise when trying to answer this question. A special feature of our efforts to deal with these problems is that we adopt several alternative approaches to identify group effects. Our study is based on a rich set of Swedish panel data, and we find indications of group effects in each of our approaches.

Keywords: Income insurance; Sic-pay; Social norms; Neighborhood Effects; Sickness Absence

JEL-codes: H56; I38; J22; Z13

50 pages, December 22, 2014

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