ABSTRACT
In most industrialised nations labour market exit caused by work-disability remains a problem of considerably concern. This is so because work-disability reduces the labour supply (Berkowitz and Johnson, 1974; Aarts, Burkhasuer and de Jong, 1996) and increases social expenditures (Rupp and Stapleton, 1998; Eurostat 1999). National policies differ with respect to the income protection that sick-listed employees enjoy, with whom the responsibility for benefit payments and labour market reintegration rests, and to what extent active labour market measures are applied to return disabled employees to work (Haveman, Halberstadt and Burkhauser, 1984; Aarts, Burkhauser and de Jong, 1996; Einerhand et. al., 1995; Bergeskog, 2001). However, how nations should design their policies to limit health related labour market exit remains an open question.
