Exits from Long-term Sickness in Sweden*

In this paper, we analyze exits from long-term sickness spells in Sweden. Using spell data for more than 2500 people, aged 20-64 years during 1986-1991, and who had at least one sickness spell of at least 60 days during 1986-1989, the aim is to analyze the transition to different states, i.e., return to work, full disability pension, partial disability pension, and other exit from the labor force. Given the complexity of the exit decision, which encompasses both the individual’s choice, the medical evaluation and the decision of the insurance adjudicator, we will consider the outcome as being the result of two aspects of the exit processes: an aspect that governs the duration of a spell prior the decision to exit, and another that governs the type of exit. Therefore, the analysis will be done in two steps: First, we will analyze the duration of the sickness spells, and then we will analyze the process that governs the type of exit. The results indicate that both individual characteristics, and push factors, such as regional unemployment, are important for both components of the decision process.