4
In contrast to Engström et al. (2010), this paper focuses on the long-term effects and
on the outcome in different labor market states. More specifically, we study the effects of
the occurrence of i) sick absence, ii) unemployment, and iii) DB at the end of each month
up to 15 months after the experiment. Our main finding is that individuals given priority
to early interventions are more sick absent and have a higher probability to receive DB.
In order to explain the results, we develop a simple theoretical model. In the model, the
caseworkers do not observe individuals’ true health. Conditional on true health, wage and
benefits, a sick-absent individual chooses a health-signal that maximizes the value of
being on sickness benefits, taking into account that the transition rates to work and DB
are affected by the signaled health. The effort of signaling bad health is assumed to be
lower when the working capacity is being assessed by the caseworker. The model predicts
that the treatment effect is larger for individuals with low incentives to return to work. In
order to test this prediction we estimate effects for employed and unemployed separately.
Consistent with the model’s prediction, we find that the effect is larger for the
unemployed than for the employed.
The report unravels as follows. In the next section, we give some background of the
social insurances system together with a description of the major parts of the Swedish
sickness insurance, disability insurance, and unemployment insurance. Section 3
describes the experiment and the data used in the empirical analysis discussed in section
4. The theoretical model with the primary aim of increasing the understanding of the
results seen in section 4 is set up in section 5. Based on separate analyses for
unemployed and employed individuals, the theoretical model is tested in section 6.
Section 7 finally concludes.
