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The influence of workers' compensation on safety incentives

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Author Info
James R. Chelius
Abstract

This study examines the impact of workers' compensation benefits on the allocation of resources to injury prevention, using unpublished data from OSHA on injury rates in manufacturing industries within 36 states. The analysis shows that higher compensation benefits are associated with lower severity rates of injury, suggesting that higher benefits induce employers to spend more on the prevention of serious injuries. On the other hand, higher benefits are also associated with higher frequency rates of injury, suggesting that higher benefits induce employees to take less care in preventing less serious injuries. The author suggests ways of resolving this dilemma and stresses that his findings show that decisions about the structure of workers' compensation laws should not be based solely on income security considerations, as they often are. (Abstract courtesy JSTOR.)

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Publisher Info
Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 35 (1982)
Issue (Month): 2 (January)
Pages: 235-242
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Handle: RePEc:ilr:articl:v:35:y:1982:i:2:p:235-242

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  1. Alan Krueger, 1988. "Moral Hazard in Workers' Compensation," Working Papers 619, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  2. Bauer, Thomas K. & Million, Andreas & Rotte, Ralph & Zimmermann, Klaus F., 1998. "Immigration Labor and Workplace Safety," IZA Discussion Papers 16, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Ronald G. Ehrenberg, 1989. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Bernard Fortin & Paul Lanoie, 1998. "Effects of Workers' Compensation: A Survey," CIRANO Working Papers 98s-04, CIRANO. [Downloadable!]
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  5. Alan B. Krueger & Bruce D. Meyer, 2002. "Labor Supply Effects of Social Insurance," NBER Working Papers 9014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. David Card & Brian P. McCall, 1995. "Is Workers' Compensation Covering Uninsured Medical Costs? Evidence fromthe `Monday Effect'," NBER Working Papers 5058, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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