Job Security and Work Absence: Evidence from a Natural Experiment

42 Pages Posted: 31 Mar 2006

See all articles by Assar Lindbeck

Assar Lindbeck

; CESifo (Center for Economic Studies and Ifo Institute); Research Institute of Industrial Economics (IFN)

Marten Palme

Stockholm University - Department of Economics; IZA Institute of Labor Economics

Mats Persson

Stockholm University; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2006

Abstract

We analyze the consequences for sickness absence of a selective softening of job security legislation for small firms in Sweden in 2001. According to our differences-in-difference estimates, aggregate absence in these firms fell by 0.2-0.3 days per year. This aggregate net figure hides important effects on different groups of employees. Workers remaining in the reform firms after the reform reduced their absence by about one day. People with a high absence record tended to leave reform firms, but these firms also became less reluctant to hire people with a record of high absence.

Keywords: seniority rules, sick pay insurance, firing costs, moral hazard

JEL Classification: H53, I38, J22, J5, M51

Suggested Citation

Lindbeck, Assar and Palme, Marten and Persson, Mats, Job Security and Work Absence: Evidence from a Natural Experiment (March 2006). CESifo Working Paper Series No. 1687. Available at SSRN: https://ssrn.com/abstract=894210

Assar Lindbeck (Contact Author)

( email )

Stockholm, SE-10691
Sweden
+46 8 163 078 (Phone)
+46 8 162 946 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/assarl

Marten Palme

Stockholm University - Department of Economics ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden
+46163307 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mats Persson

Stockholm University ( email )

Stockholm, SE-10691
Sweden

HOME PAGE: http://www.cesifo.de

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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