Working Paper No. 660

Job Security and Work Absence: Evidence from a Natural Experiment

Published: February 14, 2006Pages: 37Keywords: Seniority Rules; Sick Pay Insurance; Firing Costs; Moral Hazard JEL-codes: H53, I38, J22, J50, M51

Job Security and Work Absence: Evidence from a Natural Experiment Assar Lindbeck, Mårten Palme and Mats Persson


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.

Assar Lindbeck

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An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

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The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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