The Effects of Cutbacks in Swedish Sickness Benefits

Since 1990 sickness benefits have been reduced in Sweden. In this paper we use data from the labour force survey to study the introduction of a qualification day in 1993. Our main centre of interest is the distributional effects caused by this cutback, and to this end we analyse a large number of interactions between background variables and the reform dummy. Considerable attention is thus paid to variable subset selection in binary choice models. Our results show that sick leave incidence is greater for those with job security, but that this difference has decreased after the cutbacks