The case for presenteeism — Evidence from Norway's sickness insurance program

Can a work-first strategy control moral hazard problems in temporary disability insurance, and accelerate recovery? Based on empirical analysis of Norwegian data, we show that it can. Activation requirements not only bring down benefit claims, they also reduce the likelihood that long-term sickness absence leads to inactivity. Our findings show that absentees who are assigned graded (partial) absence certificates by their physician have shorter absences and higher subsequent employment rates than they would have had on regular sick leave. We conclude that the activation strategies that in recent years have permeated European and US welfare policy may fruitfully be carried over to sick leave insurance for temporary disabled workers.

► Referring sick-listed employees to partial work improves their job prospects. ► Substituting part-time for full-time absence reduces absence duration. ► Activation requirements in sick-leave insurance reduce moral hazard problems.