Search results

In Denmark and several other European countries, firms are obliged to cover the first two weeks of sickness. The insurance scheme is provided by government authority and is designed to help small firms with the financial burden related to sickness absence of their workers. The purpose of this paper is to investigate the effect of firms’ participation in an insurance scheme on the long-term sickness absence of their employees, using administrative records.

To identify potential moral hazard, the authors use IV approach created by the eligibility threshold, in order to identify the true causal effect of sickness insurance on sickness absence of workers. The authors use the eligibility criterion as an instrument for the participation in the insurance scheme. The authors confirm the presence of moral hazard in insured firms.

The authors show that sickness absence in insured firms is much more prevalent than in uninsured firms. Sickness spells in insured firms are shorter and the conditional probability to return back to work from sickness is much higher in insured firms.

These results suggest that employees in insured firms are less monitored during the first two weeks and that their sickness is less serious. The authors demonstrate in the paper that the minimum cost of the present insurance scheme is similar to about 1,100 man-years. On top of that comes a substantial cost to more short time sickness.

The authors provide additional evidence on this topic using precise administrative spell data combined with socio-economic data. Compared to previous literature, the authors include duration analysis and identify the presence of moral hazard using a Cox proportional hazard model.

In this paper, the authors analyse a 2010 legal reform in the Czech Republic, which allowed retirees to simultaneously receive regular pension benefits and to work on a permanent contract for a period longer than one year. Previously, concurrence of employment and receipt of retirement benefits were only allowed in conjunction with a temporary work contract with a maximum duration of one year.

The authors employ the difference-in-differences method. The authors include only males in the analysis because it is not possible to identify the legal retirement age for women from available data. Men in the workforce 1–3 years prior to the statutory retirement age are in a control group, while men 1–3 years older are in a treatment group.

The authors show that the reform significantly increased the share of permanent contracts held by retirees (by 22.5–27.6 percentage points), though we do not find any aggregate short-term change in employment of retirees. Heterogeneity analysis shows a significant increase in the employment of retirees with only elementary school education (by 17.9 percentage points) and a significant decrease in the number of hours worked by retirees (by 2.5 h weekly for low-educated workers).

The policy conclusion is that the regulation of employment contract does not affect aggregate employment, but may improve employment of low skilled workers.

To the authors’ best knowledge, there are no studies directly analysing motivation of retirees by types of employment contracts. The authors, thus, add to the literature that studies dealing with the general fixed-term versus permanent contracts (Engellandt and Riphahn, 2003) and motivation to work.