Self‐screening Effects of Monitoring: Evidence from a Quasi Experiment in the Swedish Temporary Parental Benefit Program
| Date | 01 October 2018 |
| DOI | http://doi.org/10.1111/obes.12230 |
| Published date | 01 October 2018 |
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©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 80, 5 (2018) 0305–9049
doi: 10.1111/obes.12230
Self-screening Effects of Monitoring: Evidence from a
Quasi Experiment in the Swedish Temporary Parental
Benefit Program*
Iida H ¨
akkinen Skans† and Per Johansson‡
†The National Institute of Economic Research, Stockholm, Sweden (e-mail:
iida.hakkinen-skans@konj.se)
‡The Department of Statistics, Uppsala University, UCLS, IFAU, The Swedish National
Audit Office and IZA, Uppsala, Sweden (e-mail: per.johansson@statistics.uu.se)
Abstract
Monitoring and screening have been shown to be important to reduce moral hazard in
social insurances. This paper empirically investigates whether monitoring in the Swedish
temporary parental benefit program affects future benefit take-up. Identification is based
on the fact that parents’ benefit applications are monitored randomly by the insurer. The
estimation results show that parents who are monitored are less likely to apply again in the
near future.
I. Introduction
This paper studies the effects of monitoring in the Swedish temporary parental benefit
program on the parents’ future benefit take-up. We denote any potential effect as self-
screening as the effect is closely related to the effect defined in Parsons (1991) and the
effect found in De Jong, Lindeboom and van der Klaauw (2011). De Jong et al. (2011)
found that the increased monitoring or screening in the disability insurance program reduce
future applications to the sickness insurance (SI) program.That is, screening in one program
reduces inflow into another, later, program. The most likely reason for this effect is that
monitored individuals to a higher degree than non-monitored individuals anticipate a denial
in the later program and therefore as a consequence self-screen. In our setting, the interest
is in the effects of monitoring on later benefit claims in the same programme.
Self-screening as a model of reducing moral hazard was originallysuggested by Parsons
(1991). In his self-screening model, long waiting times for decisions will reduce the take-up
rate of disability benefits. The reason for this is that there is uncertainty about the decision
made after a claim, and there is a cost of waiting and not working if the claims are not
granted. The consequence is simply that individuals with a possibility to work will leave
for work before the benefit decision is made if the waiting time is long.
JEL Classification numbers: H55, J18, J21.
*We thank PerEngstr ¨om, Oskar Nordstr¨om Skans, Malin Olsson and seminar par ticipants at ISF for their useful
discussions and comments on an earlier versions of this paper.
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