Unemployment rate, Labor-Market and Sickness-absence. How the unemployment affects sickness-absence in Troms County. An empirical analysis

Abstract

This thesis investigates how the unemployment rate affect the sickness-absence in Troms county. For doing so, we set up a model that investigates the causal relationship between labor market tightness and workers absence behavior and the cyclical selecting of employees with bad health during different states of the business cycle. We take advantage of over 230,000 recorded sickness-absences and measures their transition from sickness back to work. Since job-security laws differs in labor-market, we choose to focus on the respected government-, municipality- and private sectors. The results indicate significant differences between the sectors, especially between private and public sector. Key findings are that: (1) The average health condition for public workers fluctuates more with the business cycle compared to private workers. (2) Lower economic activity during a spell sequence increases the risk of losing the job, however, this risk is significantly less shared in the public sector. (3) The propensity for claiming sick increases during lower economic activity. However, the “threshold” for claiming sick is significantly lower for municipality and government workers compared to private workers. Conclusion; The high level of sickness-absence in Troms county can to some degreed be explained by the large share of public workplaces.