Benefit shifting: The case of sickness insurance for the unemployed

Henningsen, Morten

doi:10.1016/j.labeco.2007.12.001

Cited by 20 publications

(14 citation statements)

References 30 publications

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“…Both studies report a positive impact of the generosity of sickness benefits on the probability of reporting sick, and Larsson (2006) additionally finds that sick reports increase as the unemployment benefits expiration date approaches. In line with this Henningsen (2008) presents evidence that the transition rate to sickness insurance increases sharply shortly before the exhaustion of unemployment benefits among Norwegian unemployed. Using data for Germany, Hofmann (2010) presents evidence for an increased transition rate into sickness absence once unemployed have received a vacancy referral (VR).…”

Section: Introductionsupporting

confidence: 69%

The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions

2016

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Unemployment insurance agencies often combat moral hazard by punishing refusals to apply to assigned vacancies. However, the possibility to report sick creates an additional moral hazard, since (at least in Germany) during sickness spells, minimum requirements on search behavior do not apply. We analyze the effects on unemployment duration and job quality, as measured by the wage and employment stability. To evaluate sanction effects and the impact of receiving vacancy referrals, we take the endogenous probability of reporting sick into account. We estimate multi-spell duration models with selection on unobserved characteristics. We find that vacancy referrals and imposed sanctions increase the exit rate to work. Jobs found after receiving a vacancy referral as well as after the imposition of a sanction are less stable and go along with a lower wage. Our results suggest that around 8.5% of sickness absence during unemployment are induced by receiving a vacancy referral. The impact of vacancy referrals on sickness absence is decreasing over time spent in unemployment.Keywords: unemployment, vacancy referrals, sanctions, sickness absence, moral hazard. JEL codes: J64, J65, C41, C21 * University of Mannheim, IFAU Uppsala, VU University Amsterdam, IZA Bonn † University of Mannheim, IAB Nuremberg ‡ University of Mannheim, IAB Nuremberg, DIW Berlin, IZA BonnWe thank John Ham, Bo Honore, Per Johannson, Johan Vikström, Nikolas Ziebarth and seminar participants at CREST, University of Dortmund, University of Munich, NIW in Hannover, and at several workshops and conferences for valuable comments.

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Section: Introductionsupporting

confidence: 69%

The Role of Sickness in the Evaluation of Job Search Assistance and Sanctions

2016

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“…Consequently, there is little evidence regarding the impact of UI exhaustion on benefit shifting and transitions to education. For Norway (Røed and Zhang 2005; Henningsen 2008) and Sweden (Larsson 2006), there is some evidence that the take‐up rate of sickness insurance benefits increases as the point of UI exhaustion comes closer. But the quantitative importance of this and other potential side‐effects of UI exhaustion remains unexplored.…”

Section: Relation To Previous Researchmentioning

confidence: 99%

Unemployment Insurance in Welfare States: The Impacts of Soft Duration Constraints

Røed¹,

Westlie²

2012

Journal of the European Economic Association

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Based on a major reform of Norwegian unemployment insurance (UI), we examine the behavioral impacts of soft and hard UI duration constraints. A constraint is interpreted as hard if a claimant cannot rely on any form of income support after exhaustion, and as soft if UI is replaced by follow‐on benefits or participation in active labor market programs (ALMP). We find that both hard and soft constraints raise the job hazard significantly, with surprisingly similar spikes at UI exhaustion. Participation in ALMP raises the probability of eventually finding a job, but at the cost of lengthening the overall job‐search period.

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“…Kreuger and Meyer 2002). Several studies have shown that persons progress from the unemployment insurance into the sickness insurance when the replacement rate is higher in the latter (Henningsen, 2006;Autor and Duggan, 2006;Karlstrom, Palme andSvensson, 2007 andEuropean Economic Advisory Group, 2007). In Sweden, the sickness insurance is more generous than the unemployment insurance.…”

Section: Sickness and Unemployment Insurancesmentioning

confidence: 99%