Empirical essays on education and social insurance policies

Dissertation at Uppsala University to be publicly examined in Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, Friday, February 26, 2010 at 15:15 for the Degree of Doctor of Philosophy. The examination will be conducted in English. HALL, Caroline, 2010, Empirical Essays on Education and Social Insurance Policies; Department of Economics, Uppsala University, Economic Studies 122, 147 pp, ISBN 978-91-85519-29-3, ISSN 02837668, urn:nbn:se:uu:diva-111952.

This thesis consists of four self-contained essays.

Essay 1: This paper evaluates the effects of the introduction of a more comprehensive upper secondary school system in Sweden in the 1990s. The reform reduced the differences between the academic and vocational educational tracks through prolonging and substantially increasing the academic content of all vocational tracks. The effects of this policy change are identified by exploiting a six year pilot scheme, which preceded the actual reform in some municipalities. The results show that the prolongation of the vocational tracks brought about an increased probability of dropping out among low performing students. Though one important motive behind the policy change was to enable all upper secondary school graduates to pursue a university degree, I find no effects on university enrolment or graduation. There are some indications, however, that attending the longer and more academic vocational
tracks may have led to increased earnings in the long run.

Essay 2: (co-authored with Peter Fredriksson, Elly-Ann Johansson and Per Johansson) We examine whether the impact of pre-school interventions on cognitive skills differs by immigrant background. The analysis is based on Swedish data containing information on childcare attendance, rich family background information, the performance on cognitive tests at age 13, and long-run educational attainment for cohorts born between 1967 and 1982. We find that childcare attendance reduces the gap in language skills between children from immigrant backgrounds relative to native-born children. We find no differential effects on inductive skills, however. Nor does childcare appear to affect the distribution of long-run educational attainment.

Essay 3: (co-authored with Laura Hartman) This paper studies a specific type of moral hazard that arises in the interplay between two large public insurance systems in Sweden, namely the sickness insurance (SI) and the
unemployment insurance (UI). Moral hazard can arise from the structure of the benefit levels as for some unemployed persons benefits from the SI are higher than benefits from the UI. We use a reform of the SI system that came into force on 1 July 2003 to identify the effect of economic incentives arising from the different benefit levels. The purpose of the reform was to eliminate the difference in benefits between the two insurance systems. Our results from a duration analysis show clearly that the higher the sickness benefits, the higher the probability of reporting sick.

Essay 4: Previous research suggests that there are substantial interactions between the unemployment insurance (UI) and the sickness insurance (SI) in Sweden. Moral hazard arises in the interplay between these two social insurance
systems, since by reporting sick an unemployed person can postpone the UI expiration date and sometimes also receive considerably higher benefits.
This paper examines whether these interactions affect the transition rate from unemployment to employment. To study this question I utilize a reform which greatly reduced the incentives for unemployed persons to transfer to the SI. While there is evidence that this reform substantially lowered the incidence of sick reports among the unemployed, I find no evidence suggesting
that the reduced sick report rate in turn affected the transition rate to employment.