Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2012:13: Does Privatization of Vocational Rehabilitation Improve Labor Market Opportunities? Evidence from a Field Experiment in Sweden

Lisa Laun () and Peter Skogman Thoursie ()
Additional contact information
Lisa Laun: Department of Economics, Stockholm University and the Institute for Evaluation of Labour Market and Education Policy (IFAU), Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Peter Skogman Thoursie: Department of Economics, Stockholm University and the Institute for Evaluation of Labour Market and Education Policy (IFAU), Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: This paper analyzes if privatization of vocational rehabilitation can improve labor market opportunities for individuals on long-term sickness absence. We use a field experiment performed by the Employment Service and the Social Insurance Agency in Sweden during 2008 to 2010, in which over 4,000 participants were randomly o ffered private and public rehabilitation. We find no diff erences in employment rates following rehabilitation between individuals who received rehabilitation by private and public providers. Also the average cost of rehabilitation was essentially equal for the two types of providers. This suggests that there are no large efficiency gains from privatizing vocational rehabilitation.

Keywords: Vocational rehabilitation; Privatization; Field experiment

JEL-codes: J14; J68; L33

27 pages, October 29, 2012

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