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Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries

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  • John W. Ruser

Abstract

This article examines how an increase in workers' compensation indemnity benefits affects injury rates when firms are experience-rated to varying degrees. The theoretical model shows that an increase in benefits has a smaller effect on injury rates in more highly experience-rated firms. Since an institutional characteristic of workers' compensation insurance is that larger firms tend to be more highly experience-rated, the empirically testable hypothesis is that there is a smaller relationship between benefits and injury rates in larger firms. The hypothesis is tested with injury rate regressions estimated by using data on 25 three-digit U.S. manufacturing industries for the years 1972-1979. Support for the hypothesis is found when the frequency of all injuries is the dependent variable, but the evidence for the hypothesis is less strong when the dependent variable is the frequency of lost-workday injuries.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 16 (1985)
Issue (Month): 4 (Winter)
Pages: 487-503

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Handle: RePEc:rje:randje:v:16:y:1985:i:winter:p:487-503

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Cited by:
  1. Thomas J. Kniesner & John D. Leeth, 2000. "Workplace Safety Policy: Past, Present, and Future," Center for Policy Research Policy Briefs 19, Center for Policy Research, Maxwell School, Syracuse University.
  2. 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.
  3. Dhaval Dave & Robert Kaestner, 2006. "Health Insurance and Ex Ante Moral Hazard: Evidence from Medicare," NBER Working Papers 12764, National Bureau of Economic Research, Inc.
  4. Kaestner, Robert & Grossman, Michael, 1998. "The effect of drug use on workplace accidents," Labour Economics, Elsevier, vol. 5(3), pages 267-294, September.
  5. Alan B. Krueger, 1990. "Incentive Effects of Workers' Compensation Insurance," NBER Working Papers 3089, National Bureau of Economic Research, Inc.
  6. Xiangdong Wei & Steve Russell & Robert Sandy, 2005. "Analysing workplace safety policies in hong kong with a simulation method," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 321-353.

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