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Benefit shifting: The case of sickness insurance for the unemployed

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  • Henningsen, Morten

Abstract

This study describes the probability of transition from unemployment with unemployment insurance (UI) to sickness insurance (SI), using a proportional hazard duration model and a large register-based dataset. The combination of limited UI duration and the fact that SI rights do not depend on remaining UI, creates an incentive to use SI to effectively extend UI. The separate effects of elapsed unemployment duration and of UI duration on hazard rates are identified through a reform of the UI system. The estimated hazard rate for transition from unemployment to SI increases sharply the last months before UI exhaustion. The spikes are larger for diagnosis for mental illness, and vary across individuals, but are present for all groups and all diagnoses.

Suggested Citation

  • Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.
    • Handle: RePEc:eee:labeco:v:15:y:2008:i:6:p:1238-1269
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    Cited by:

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    3. Reiso, Katrine Holm, 2014. "The Effect of Welfare Reforms on Benefit Substitution," Discussion Paper Series in Economics 22/2014, Norwegian School of Economics, Department of Economics.
    4. Márton Csilalg & Lili Márk, 2023. "The Incentive Effects of Sickness Benefit for the Unemployed – Analysis of a Reduction in Potential Benefit Duration," CERS-IE WORKING PAPERS 2317, Institute of Economics, Centre for Economic and Regional Studies.
    5. Vedeler Johnsen, Julian & Holm Reiso, Katrine, 2017. "Economic Impacts of Workfare Reforms for Single Mothers: Benefit Substitution and Labour supply responses," Working Papers in Economics 4/17, University of Bergen, Department of Economics.
    6. Julian Vedeler Johnsen & Katrine Holm Reiso, 2020. "Economic Effects of Workfare Reforms for Single Mothers: Benefit Substitution and Labour Supply Responses," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 494-523, April.
    7. Allison Thompkins & Todd Honeycutt & Claire Gill & Joseph Mastrianni & Michelle Bailey, 2014. "To Apply or Not to Apply: The Employment and Program Participation of Social Security Disability Insurance Applicants and Non-Applicants," Mathematica Policy Research Reports a1df73c5b1084bfd93ccad9a1, Mathematica Policy Research.

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