This paper presents evidence on how firms react to a more generous insurance against high sick pay costs. We exploit a reform launched in Sweden in 2015, which introduced different thresholds for insurance reimbursement depending on firm size. By comparing workers in smaller firms with workers...

This study tests for forward-looking moral hazard in the social insurance system by exploiting a 1991 reform in Sweden. The replacement rate was reduced for short absences but not for long absences, which introduced a potential future cost of returning to work. Using this exogenous variation in...

In Hungary, employees could claim sickness insurance benefit within 3 days of job-loss, which would enable them to extend their benefit duration by up to 90 days. The maximum number of days of this 'passive sickness benefit' was halved in 2007. We first investigate whether claiming passive...