Unintended Health Consequences of Decreasing Unemployment Insurance Generosity During an Economic Recession

Manuel Flores, Fernando G. Benavides and Laura Serra-Saurina
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Fernando G. Benavides: Centre d’Investigació en Salut Laboral, Universitat Pompeu Fabra & CIBER of Epidemiology and Public Health
Laura Serra-Saurina: CIBER of Epidemiology and Public Health & Research Group on Statistics, Econometrics and Health (GRECS), University of Girona.

Working Papers from Department of Applied Economics at Universitat Autonoma of Barcelona

Abstract: We exploit an unexpected labor market reform to estimate the effects of a significant decrease in unemployment insurance (UI) generosity during an economic recession. On July 13, 2012, the Spanish Government reduced the replacement rate from 60% to 50% after 180 days of UI benefit receipt for all spells beginning after July 14, 2012. Using rich linked administrative data and a difference-in-differences approach, we show that the decrease in UI generosity resulted in higher sickness absence rates, thereby reducing the previously documented government savings from this reform. Our findings suggest that both financial stress and moral hazard are possible mechanisms.

Keywords: Unemployment insurance; sickness absence; policy reform; financial stress. (search for similar items in EconPapers)
Pages: 68 pages
Date: 2024-11
New Economics Papers: this item is included in nep-eur, nep-hea, nep-lab and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:uab:wprdea:wpdea2403

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