Assessing the effect of a compulsory sickness

insurance on worker absenteeism*

Per Johansson † and Mårten Palme ‡

December 9, 1998

SSE/EFI Working Paper Series in Economics and Finance No. 287

December 1998

Abstract

The effect of economic incentives on worker absenteeism is analyzed using

panel data on work absence behavior for each day during 1990 and 1991 (i.e.
730 observations in the time dimension) for a representative sample of 1,396
Swedish blue collar workers. During the observed time period, a major reform
of the sickness insurance as well as a tax reform were implemented, both of
which affected the worker’s cost of being absent from work. We differentiate
between the dynamic dependence conditional on whether the worker is in the
work absence state versus in the work presence state. We also control for
unobserved heterogeneity. The results show that the cost of being absent has a
significant effect on work absence behavior and the importance of considering
unobserved heterogeneity when modeling individual work absence behavior.

Keywords: Work absence, panel data, discrete choice.

JEL-classification: C25, C33, J22, J28.

*Financial support for this research is provided by the Swedish Council for Social Research.
†
T&S, Dalarna University SE-788 81 Borlänge, Sweden. E-mail: Per.Johansson@du.se.
‡
Department of Economic Statistics, Stockholm School of Economics, Box 6501, SE-113 83
Stockholm, Sweden. E-mail: Marten.Palme@hhs.se.
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