Does graded return-to-work improve sick-listed workers' chance of returning to regular working hours?

Using Danish register and survey data, we examine the effect of a national graded return-to-work program on the probability of sick-listed workers returning to regular working hours. During program participation, the sick-listed worker works fewer hours and 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. Taking account of unobserved differences between program participants and non-participants, we find that participation in the program significantly increases the probability of returning to regular working hours.