Working paper // IFAU - Institute for Labour Market Policy Evaluation 2008:18
Previous research suggests that there are substantial interactions between the unemployment insurance (UI) and the sickness insurance (SI) in Sweden. Moral hazard arises in the interplay between these two social insurance systems, since by reporting sick an unemployed person can postpone the UI expiration date and someÿtimes also receive considerably higher benefits. This paper examines whether these interactions affect the transition rate from unemployment to employment. To study this question I utilize a reform which greatly reduced the incentives for unemployed persons to transfer to the SI. While there is evidence that this reform substantially lowered the incidence of sick reports among the unemployed, I find no evidence suggesting that the reduced sick reÿport rate in turn affected the transition rate to employment.
Unemployment insurance sickness insurance unemployment duration health duration analysis