Frisch Centre



 

Moving between Welfare Payments. The Case of Sickness Insurance for the Unemployed

By Henningsen, Morten
Memorandum 4/2006

Abstract This study describes the probability of transition from unemployment with unemployment insurance (UI) to sickness with sickness insurance (SI), using a grouped proportional hazard duration model and 9 years of monthly panel data. The combination of duration-limited UI and the fact that SI rights do not depend on remaining UI, creates an incentive to apply for SI, which is strongest immediately before UI expires. Estimation shows that the sickness hazard increases by around 50% when UI is about to end. Data on the sickness spells reveal that those who were given SI shortly before UI expired, are more likely to fully exploit the maximum of 12 months SI.
JEL Classification: C41; J64; J65; I18
Keywords: Unemployment insurance, sickness insurance, unemployment duration
Project: 1151 Mobilizing labour force participation
Contact: morten.henningsen@frisch.uio.no
   
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