First Exits from the Swedish Labor Market Due to Disability*

The number of disability exits has been increasing in recent years, raising questions both about the well being of affected individuals, and about how to finance the related disability pensions. Using a longitudinal database owned by the Swedish National Social Insurance Board, this study analyzes the risk to exit into disability at a certain age, assuming that people remained in the labor force until that age. The estimates show that it was more than 7% higher for each 100 days of sickness, but was lower with each additional sickness spell. It was also higher for increments of 1% in the regional unemployment rate. These results suggest that more resources should be allocated for prevention, improving working conditions and designing the tasks of each job so as avoid overuse of employees working capacity.