Mårten Palme

Do economic incentives affect work absence? Empirical evidence using Swedish micro data

Using a linear demand function, frequently used in labour supply studies, absenteeism is modelled as an individual day-to-day decision. The parameters in the econometric model are consistently estimated, using the (time-aggregated) number of days absent in 1981 as the dependent variable for a sample of Swedish blue-collar workers (both men and women), under some assumptions on unobserved heterogeneity and serial correlation. Implications of compensating wage differentials and efficiency wage hypotheses are discussed. The results for the male subsample reveal a negative effect on work absence of the direct cost of being absent. However, for the female subsample, the Slutsky condition is rejected.

Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States

This paper compares income inequality and income mobility in the Scandinavian countries and the United States during 1980–90. The results suggest that inequality is greater in the United States than in the Scandinavian countries and that this inequality ranking of countries remains unchanged when the accounting period of income is extended from one to eleven years. The pattern of mobility turns out to be remarkably similar, in the sense that the proportionate reduction in inequality from extending the accounting period of income is much the same. But we do find evidence of greater dispersion of first differences of relative earnings and income in the United States. Relative income changes are associated with changes in labor market and marital status in all four countries, but the magnitude of such changes are largest in the United States.

Assessing the Effect of Public Policy on Worker Absenteeism

We analyze the effect of economic incentives on worker absenteeism, using panel data on work absence for 1990 and 1991 with a sample of 1,396 Swedish blue-collar workers. During this period Sweden implemented major reforms of both its national income replacement program for short-term sickness and income taxes. Both affected the workers cost of missing work. Our econometric model allows for state-dependent dynamic behavior and control for unobserved heterogeneity. The latter proves to be an important consideration. We find that the cost of being absent significantly affects work absence behavior.

Long-Term Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations

Most previous studies of intergenerational transmission of human capital are restricted to two generations: how parents influence their children. In this study, we use a Swedish data set that links individual measures of lifetime earnings for three generations and data on educational attainment for four generations. We find that estimates obtained from data on two generations severely underestimate long-run intergenerational persistence in both labor earnings and educational attainments. Long-run social mobility is hence much lower than previously thought. We attribute this additional persistence to “dynastic human capital” — the influence on human capital of more distant family members than parents.

Assessing the Effect of a Compulsory Sickness Insurance on Worker Absenteeism

The effect of economic incentives on worker absenteeism is analyzed using panel data on work absence behavior for each day during 1990 and 1991 (i.e. 730 observations in the time dimension) for a representative sample of 1,396 Swedish blue collar workers. During the observed time period, a major reform of the sickness insurance as well as a tax reform were implemented, both of which affected the workers cost of being absent from work. We differentiate between the dynamic dependence conditional on whether the worker is in the work absence state versus in the work presence state. We also control for unobserved heterogeneity. The results show that the cost of being absent has a significant effect on work absence behavior and the importance of considering unobserved heterogeneity when modeling individual work absence behavior.

Pathways to Retirement and Retirement Incentives in Sweden

We use a large panel data set (LINDA) to describe retirement behaviour in Sweden. The importance of different pathways to retirement is analysed. Survival functions for labor force participation of several groups in the labor force are estimated. We then provide a detailed analysis of economic incentives for additional work of older workers in Sweden inherent in the social security system, occupational pension schemes, labor market insurance programs, income taxes and housing allowances. The analysis shows the importance of these components of the income security system in forming the incentives.

Income distribution effects of the Swedish 1991 tax reform: An analysis of a microsimulation using generalized Kakwani decomposition

In 1991 a major tax reform was implemented in Sweden. This study compares the income equalization (income redistribution), vertical and horizontal equity properties of the pre- and post-reform tax and transfer systems. The method used is a decomposition, first proposed by Kakwani (1984), of the difference between the generalized Gini coefficients of the pre- and post-tax/transfer income districutions. The post-reform income distribution was obtained through a microsimulation carried out by the Ministry of Finance. Several findings emerge from the study. (i) The distribution of original incomes is unambiguously more equal under the post-reform regime. (ii) The increased amounts of child and housing allowances have a considerable equalizing effect. (iii) The pre-reform tax system has a larger vertical redistributive (equalizing) component. The decreased progressivity is the most important explanation in the lower end of the distribution, while the decreased tax rate explains more of the difference in the upper end. (iv) The reform increased horizontal equity. (v) It is a value judgement which of the distributions of disposable income are the most equal. The first four of these main findings apply when the calculations were redone within each separate household group. The overall methodological conclusion is that much more information was gained when different generalizations of the decomposition were considered.

Gender discrimination and compensating differentials in Sweden

The determinants of the unexplained component of the male–female wage difference in Sweden are examined. The hypothesis that there is a compensating wage differential associated with undesirable job charcteristics is tested. Hedonic wage equations are estimated using data collected in the 1981 Swedish Level of Living Survey The estimation takes into consideration possible sample selection bias due to the non-randomness takes of employment and the potential endogeneity of job choice variables in wage offer equations. Overall, the analysis indicates that compensating wage differentials are not a major determinant of the male–female wage difference in Sweden.

A test of the Becker-Tomes model of human capital transmission using microdata on four generations

We estimate the well-known Becker-Tomes model of intergenerational transmission of human capital. A Swedish data set, which links individual measures on educational attainments of four generations, enables us to use great-grandparents’ education as an instrumental variable. The identifying assumption, which holds within the Becker-Tomes framework, is that great-grandparents’ education is unrelated to great-grandchildren’s education, conditional on the education of the parent and grandparent. We test the model’s prediction that the structural parameter for grandparents’ education enters with a negative sign in an intergenerational regression model.

School Performance After Preterm Birth

Background: An increased risk of poor school performance for children born preterm has been shown in many studies, but whether this increase is attributable to preterm birth per se or to other factors associated with preterm birth has not been resolved. Methods: We used data from the Swedish Medical Birth Register, the Longitudinal Integration Database for Sickness Insurance and Labor Market Study, the Swedish Multigeneration Register, and the National School Register to link records comprising the Swedish birth cohorts from 1974 through 1991. Linear regression was used to assess the association between gestational duration and school performance, both with and without controlling for parental and socioeconomic factors. In a restricted analysis, we compared siblings only with each other. Results: Preterm birth was strongly and negatively correlated with school performance. The distribution of school grades for children born at 31–33 weeks was on average 3.85 (95% confidence interval = −4.36 to −3.35) centiles lower than for children born at 40 weeks. For births at 22–24 weeks, the corresponding figure was −23.15 (−30.32 to −15.97). When taking confounders into account, the association remained. When restricting the analysis to siblings, however, the association between school performance and preterm birth after week 30 vanished completely, whereas it remained, less pronounced, for preterm birth before 30 weeks of gestation. Conclusions: Our study suggests that the association between school performance and preterm birth after 30 gestational weeks is attributable to factors other than preterm birth per se.