Sickness Absence and Labour Market Outcomes

Abstract: This thesis consists of three self-contained essays.Essay I examines whether a worker’s sickness absence behaviour influences the risk of becoming unemployed. Swedish panel data are used to estimate the relationship between the incidence and the duration of sick leaves and subsequent unemployment. The results indicate that an increase in the number of sick leaves as well as an increase in the duration of sick spells are associated with a higher risk of unemployment. Women run a significantly higher risk of unemployment than men in connection with sick-leave spells longer than 28 days. An implication of the results is that less absence-prone workers are more likely to remain employed in a recession. This, in turn, may partly explain the pro-cyclical pattern of aggregate Swedish sickness absence rates.Essay II investigates the effect of sickness absence on subsequent wages, which is estimated using a rich Swedish panel data set covering 1996 to 2001. The main results of this paper are that for both genders, full-time sickness absence has a short-term and a long-term negative effect on wages. One year of full-time sick absence yields a long-run wage penalty of 5.7 percent for men and 4.7 percent for women. The wage penalty of full-time sick leave is significantly higher in the private than in the public sector. Separately estimating the wage equation for four age groups yields a pattern of a decreasing negative wage effect of full-time sick leaves over age. Furthermore, an increasing wage penalty of full-time sickness absence in the years of education is also found.Essay III studies the relationship between sickness absence and spousal retirement. Swedish panel data have been used to estimate the effects of both old-age retirement and disability retirement on average sickness absence during 1996 to 2001 for both men and women. Spousal old-age retirement significantly increases female average long-term sickness absence by approximately one week, while spousal disability retirement yields a significant increase in average sickness absence for men by approximately one week and for women by approximately two weeks. Some evidence of increased incidence of long-term sickness absence due to spousal retirement is found.