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The Effect of Past Sickness on Current Earnings in Sweden

Author

Listed:
  • Andrén, Daniela

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Palmer, Edward

    (Uppsala University and The Swedish National Social Insurance Board)

Abstract

This paper examines whether sickness history affects annual earnings and/or hourly wages in Sweden, using a unique longitudinal database. If poor health makes people less productive, previous sickness is expected to have a negative effect on hourly wages. If poor health reduces people’s working capacity, but not their productivity, it is expected to decrease the hours worked, which implies lower annual earnings and no change in their hourly wage. The results indicate that people who are healthy in the current year but have a longer spell of sickness in previous years have lower earnings than persons who have no record of long-term sickness, and that the effect goes through hours of work rather than the wage rate. In addition, in the current year, sickness has a convex relationship with earnings, going through wages. Persons with lower (higher) wages have more (fewer) days of compensated absenteeism.

Suggested Citation

  • Andrén, Daniela & Palmer, Edward, 2004. "The Effect of Past Sickness on Current Earnings in Sweden," Working Papers in Economics 138, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0138
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    File URL: http://hdl.handle.net/2077/2777
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    References listed on IDEAS

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    More about this item

    Keywords

    sickness history; reported hours of work; earnings and wage equations;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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