THE EFFECT OF SICKNESS ON EARNINGS

Daniela Andrén () and Edward Palmer ()
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Edward Palmer: Uppsala University and National Social Insurance Board, Postal: SE 103 51 Stockholm

No 45, Working Papers in Economics from Göteborg University, Department of Economics

Abstract: The question addressed in this paper is whether sickness history affects annual earnings and hourly wages in Sweden. If poor health makes people less productive, we expect to find a negative effect of previous health history on hourly wages. If, instead, poor health reduces people´s working capacity, but not their productivity, this implies only a decrease in hours worked. Using a longitudinal database for individual sickness, we estimate both (annual) earnings and (hourly) wage equations, and find that people who are healthy in the current year, but have long-term sickness in the previous five years have lower earnings than persons without long-term sickness.

Keywords: human capital model; age-earnings profiles; earnings; wage equations; sickness spells; health variables. (search for similar items in EconPapers)
JEL-codes: I10 I12 J24 J28 (search for similar items in EconPapers)
Date: 2001-05-23
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