IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v108y2018i10p2995-3027.html
   My bibliography  Save this article

Medical Care Spending and Labor Market Outcomes: Evidence from Workers' Compensation Reforms

Author

Listed:
  • David Powell
  • Seth Seabury

Abstract

Medical care represents an important component of workers' compensation benefits with the potential to improve health and post- injury labor outcomes, but little is known about the relationship between medical care spending and the labor outcomes of injured workers. We exploit the 2003–2004 California workers' compensation reforms which reduced medical spending disproportionately for workers incurring low back injuries. We link administrative claims data to earnings records for injured workers and their uninjured coworkers. We find that workers with low back injuries experienced a 7.6% post-reform decline in medical care, and an 8.1% drop in post-injury earnings relative to other injured workers.

Suggested Citation

  • David Powell & Seth Seabury, 2018. "Medical Care Spending and Labor Market Outcomes: Evidence from Workers' Compensation Reforms," American Economic Review, American Economic Association, vol. 108(10), pages 2995-3027, October.
    • Handle: RePEc:aea:aecrev:v:108:y:2018:i:10:p:2995-3027
    Note: DOI: 10.1257/aer.20150912
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20150912
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=MDKqkw0Gp0MytcTUEJtEC52mWIv_0XsD
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=OEJuL6dU6BMcED25IgnjO9J-tOjfQK5X
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=pxhE_DF3Nw21Ukx2E7fsV-ObeW5qu5PE
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. MacKinnon, James G & Magee, Lonnie, 1990. "Transforming the Dependent Variable in Regression Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 315-339, May.
    2. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115(1), pages 103-140.
    3. Ruser, John W, 1991. "Workers' Compensation and Occupational Injuries and Illnesses," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 325-350, October.
    4. Silvia Helena Barcellos & Mireille Jacobson, 2015. "The Effects of Medicare on Medical Expenditure Risk and Financial Strain," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 41-70, November.
    5. Meyer, Bruce D & Viscusi, W Kip & Durbin, David L, 1995. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment," American Economic Review, American Economic Association, vol. 85(3), pages 322-340, June.
    6. Carboni, Oliviero A., 2012. "An empirical investigation of the determinants of R&D cooperation: An application of the inverse hyperbolic sine transformation," Research in Economics, Elsevier, vol. 66(2), pages 131-141.
    7. Craig L. Garthwaite, 2012. "The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 116-137, July.
    8. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
    9. Alan M. Garber & Jonathan Skinner, 2008. "Is American Health Care Uniquely Inefficient?," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 27-50, Fall.
    10. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416, Elsevier.
    11. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    12. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 111-144, National Bureau of Economic Research, Inc.
    13. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    14. Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From PatientMigration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1681-1726.
    15. Whitney K. Newey, 2009. "Two-step series estimation of sample selection models," Econometrics Journal, Royal Economic Society, vol. 12(s1), pages 217-229, January.
    16. Joseph J. Doyle, Jr. & John A. Graves & Jonathan Gruber & Samuel Kleiner, 2012. "Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns," NBER Working Papers 17936, National Bureau of Economic Research, Inc.
    17. Denis Bolduc & Bernard Fortin & France Labrecque & DPaul Lanoie, 2002. "Workers' Compensation, Moral Hazard and the Composition of Workplace Injuries," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 623-652.
    18. Joseph J. Doyle, 2011. "Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 221-243, July.
    19. Butler, Richard J & Worrall, John D, 1985. "Work Injury Compensation and the Duration of Nonwork Spells," Economic Journal, Royal Economic Society, vol. 95(379), pages 714-724, September.
    20. Alan M. Garber & Jonathan Skinner, 2008. "Is American Health Care Uniquely Inefficient?," NBER Working Papers 14257, National Bureau of Economic Research, Inc.
    21. Pence Karen M., 2006. "The Role of Wealth Transformations: An Application to Estimating the Effect of Tax Incentives on Saving," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-26, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nicolas R. Ziebarth, 2018. "Social Insurance and Health," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 57-84, Emerald Group Publishing Limited.
    2. Maclean, J. Catherine & Pichler, Stefan & Ziebarth, Nicolas R., 2020. "Mandated Sick Pay: Coverage, Utilization, and Welfare Effects," IZA Discussion Papers 13132, Institute of Labor Economics (IZA).
    3. Koen Jochmans & Vincenzo Verardi, 2022. "Instrumental‐variable estimation of exponential‐regression models with two‐way fixed effects with an application to gravity equations," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(6), pages 1121-1137, September.
    4. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2023. "Free-Ridership in Subsidies for Company- and Private Electric Vehicles," Ruhr Economic Papers 1015, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Liu, Wei & Zhao, Zhihui & Wen, Zhao & Cheng, Shixiong, 2022. "Environmental regulation and OFDI: Evidence from Chinese listed firms," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 191-208.
    6. Broten, Nicholas & Dworsky, Michael & Powell, David, 2022. "Do temporary workers experience additional employment and earnings risk after workplace injuries?," Journal of Public Economics, Elsevier, vol. 209(C).
    7. Sarah Tahamont & Zubin Jelveh & Aaron Chalfin & Shi Yan & Benjamin Hansen, 2019. "Administrative Data Linking and Statistical Power Problems in Randomized Experiments," NBER Working Papers 25657, National Bureau of Economic Research, Inc.
    8. Stefan Pichler & Nicolas R. Ziebarth, 2020. "Labor Market Effects of U.S. Sick Pay Mandates," Journal of Human Resources, University of Wisconsin Press, vol. 55(2), pages 611-659.
    9. J. M. C. Santos Silva & Silvana Tenreyro, 2022. "The Log of Gravity at 15," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 423-437, September.
    10. Marika Cabral & Marcus Dillender, 2020. "The Impact of Benefit Generosity on Workers’ Compensation Claims: Evidence and Implications," NBER Working Papers 26976, National Bureau of Economic Research, Inc.
    11. Alacevich, Caterina & Nicodemo, Catia, 2019. "Immigration and Work-Related Injuries: Evidence from Italian Administrative Data," IZA Discussion Papers 12510, Institute of Labor Economics (IZA).
    12. Dillender, Marcus & Jinks, Lu & Lo Sasso, Anthony T., 2023. "When (and why) providers do not respond to changes in reimbursement rates," Journal of Public Economics, Elsevier, vol. 217(C).
    13. Pichler, Stefan & Ziebarth, Nicolas R., 2024. "Sick Leave and Medical Leave in the United States: A Categorization and Recent Trends," IZA Policy Papers 206, Institute of Labor Economics (IZA).
    14. Marika Cabral & Can Cui & Michael Dworsky, 2019. "The Demand for Insurance and Rationale for a Mandate: Evidence from Workers’ Compensation Insurance," NBER Working Papers 26103, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alison Morantz, 2010. "Opting Out of Workers' Compensation in Texas: A Survey of Large, Multistate Nonsubscribers," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 197-238, National Bureau of Economic Research, Inc.
    2. Fortin, B. & Lanoie, P., 1998. "Effects of Workers' Compensation : A Survey," Papers 9816, Laval - Recherche en Politique Economique.
    3. Fadlon, Itzik & Van Parys, Jessica, 2020. "Primary care physician practice styles and patient care: Evidence from physician exits in Medicare," Journal of Health Economics, Elsevier, vol. 71(C).
    4. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    5. Janet Currie & W. Bentley MacLeod, 2017. "Diagnosing Expertise: Human Capital, Decision Making, and Performance among Physicians," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 1-43.
    6. Janet Currie & W. Bentley MacLeod & Jessica Van Parys, 2015. "Physician Practice Style and Patient Health Outcomes: The Case of Heart Attacks," NBER Working Papers 21218, National Bureau of Economic Research, Inc.
    7. David Powell, 2020. "Does Labor Supply Respond to Transitory Income? Evidence from the Economic Stimulus Payments of 2008," Journal of Labor Economics, University of Chicago Press, vol. 38(1), pages 1-38.
    8. Amitabh Chandra & Carrie H. Colla & Jonathan S. Skinner, 2023. "Productivity Variation and Input Misallocation: Evidence from Hospitals," NBER Working Papers 31569, National Bureau of Economic Research, Inc.
    9. Anne-Line Koch Helsø & Mr. Nicola Pierri & Adelina Yanyue Wang, 2019. "The Economic Impact of Healthcare Quality," IMF Working Papers 2019/173, International Monetary Fund.
    10. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector," American Economic Review, American Economic Association, vol. 106(8), pages 2110-2144, August.
    11. Ziebarth, Nicolas R. & Karlsson, Martin, 2010. "A natural experiment on sick pay cuts, sickness absence, and labor costs," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1108-1122, December.
    12. Joachim Marti & Michael R. Richards, 2017. "Smoking Response to Health and Medical Spending Changes and the Role of Insurance," Health Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 305-320, March.
    13. Nicolas R. Ziebarth & Martin Karlsson, 2014. "The Effects Of Expanding The Generosity Of The Statutory Sickness Insurance System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 208-230, March.
    14. Simona Grassi & Ching-to Albert Ma, 2016. "Information acquisition, referral, and organization," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 935-960, November.
    15. Puhani, Patrick A. & Sonderhof, Katja, 2010. "The effects of a sick pay reform on absence and on health-related outcomes," Journal of Health Economics, Elsevier, vol. 29(2), pages 285-302, March.
    16. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    17. Ciani Emanuele & Fisher Paul, 2019. "Dif-in-Dif Estimators of Multiplicative Treatment Effects," Journal of Econometric Methods, De Gruyter, vol. 8(1), pages 1-10, January.
    18. Lechner, Michael, 2011. "The Estimation of Causal Effects by Difference-in-Difference Methods," Foundations and Trends(R) in Econometrics, now publishers, vol. 4(3), pages 165-224, November.
    19. Andrew J. Rettenmaier & Zijun Wang, 2012. "Regional variations in medical spending and utilization: a longitudinal analysis of US Medicare population," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 67-82, February.
    20. Contreras Juan & Patel Elena & Tristao Ignez, 2013. "Production Factors, Productivity Dynamics and Quality Gains as Determinants of Healthcare Spending Growth in U.S. Hospitals," Working Papers 2013-13, Banco de México.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:108:y:2018:i:10:p:2995-3027. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.