Does Graded Return to Work Improve Disabled Workers’ Labour Market Attachment?

Using Danish register and survey data, we examine the effect of a graded-return-to-work program on sick-listed workers’ probability of returning to regular working hours. During program participa-tion, the worker receives the normal hourly wage for the hours worked and sickness benefit for the hours off work. When the worker’s health improves, working hours are increased until the sick-listed worker is able to work regular hours. Previous studies either concern specially designed pro-grams with a limited population of disabled workers or they do not take into account the unobserved differences between program participants and non-participants. Taking account of such unobserved differences, the authors find that participation in the program significantly increases the probability of returning to regular working hours.