Can differences in benefit levels explain duration and outcome of sickness absence?

The aim of this study is to examine the long- and short-term economic incentives inherent in the sickness and unemployment insurances. In particular, how the differences, in, for instance, benefit levels between the two systems, affect the duration and outcome of long-term sickness for the unemployed.

A sample of 280 sick-registered unemployed in the county of Värmland, Sweden was used in two regression models. Sickness duration was modelled in a linear regression and the outcome (healthy and non-healthy) in a logistic regression.

The study shows that economic incentives, i.e. differences in benefit levels, help in explaining sickness duration. The proven fact, that benefits from the sickness insurance are in general higher than from the unemployment insurance, results in the sickness spells being prolonged. Indications are also found of a preference for long-term income security through the sickness and disability insurances, using the length of unemployment before sickness registration, as a determinant of the outcome of the sickness spell.