Estimating the effects of vocational rehabilitation programs in Sweden

Abstract

AbstractThis paper estimates the effects of vocational rehabilitation on the probability of improved health status and the reintegration of program participants into the labour market. Bivariate probit models are used to estimate the probability of selection to a rehabilitation program, and its effect on restoring the work capacity of the participants and their rejoining the labour market. The empirical application is based on a sample of individuals residing in Western Sweden who qualified for the vocational rehabilitation programs and who were registered with long-term sickness during 1991-1994. The results show variations in the fraction of the sample selected to participate in the rehabilitation programs, in the effects of the programs, and in the importance of individual heterogeneity for the outcome of programs. Participation in vocational rehabilitation programs is found to have a positive effect on the participants' health status and on their rate of return to work. There was weak or no evidence of selection based upon the unobservable characteristics of individuals that are most likely to regain their health or individuals with a higher potential to gain re-employment. From a social point of view the social aspects and health-related needs of the participants are valued more than the economic efficiency of the vocational rehabilitation programs.KeywordsVocational rehabilitationlong-term sicknesshealth recoveryreturn to workSweden