Unemployment Insurance Generosity and Healthcare Use: Evidence from Sweden

Unemployment can worsen health and increase healthcare use, creating fiscal externalities in publicly financed systems. Using Swedish register data on inpatient and outpatient care visits and drug purchases, measured as total costs rather than out-of-pocket payments, this paper estimates the effect of unemployment insurance (UI) generosity on healthcare use. Exploiting benefit caps in a regression kink design, I find no evidence that more generous UI affects healthcare use. Estimates rule out cost effects greater than 0.08 SEK per 1 SEK increase in benefits during the first 40 weeks after spell start. In Sweden’s generous welfare state, modest benefit increases do not to meaningfully alter the public healthcare costs of unemployment.