Research Review of the Swedish Sickness Insurance System

The aim of this research review is to provide a structured overview of the Swedish sickness insurance system and the empirical research on its development and effects. The review focuses primarily on research in economics and related disciplines, with particular emphasis on studies using administrative register data and quasi-experimental methods.

Sickness insurance plays a central role in the welfare state by providing income protection for individuals who are unable to work due to illness. However, the design of the insurance system involves a fundamental trade-off. More generous benefits provide better income protection and reduce the financial consequences of illness, but may also weaken incentives to work and contribute to higher levels of sickness absence. Conversely, stricter eligibility requirements and more extensive monitoring may encourage a return to work and reduce the costs of the insurance system, but may also weaken income protection. Balancing these objectives is a central challenge in the design of sickness insurance.

Sweden provides a particularly interesting setting for studying these trade-offs. The Swedish sickness insurance system has undergone numerous reforms, affecting both financial incentives and the assessment and administration of benefit eligibility. Together with extensive administrative registers containing detailed information on benefit payments and labour market outcomes, these reforms have created favourable conditions for quasi-experimental studies. Such studies exploit reforms or other institutional changes to establish comparable groups and thereby seek to identify causal relationships. Research based on Swedish data therefore provides a substantial body of evidence on how sickness insurance rules and their administrative implementation affect sickness absence and other labour market outcomes.

Project leader

Lisa Laun