Melissa P. McInerney () (Department of Economics, College of William and Mary)
Abstract
During the 1990s, the state of Ohio contracted out Workers’ Compensation (WC) case management, incorporating a large bonus payment intended to reward reduced claim duration. The bonus is essentially a decreasing function of average days away from work, excluding claims longer than 15 months. In response, duration is predicted to decrease for minor claims and increase for some severe claims so that claimants miss more than 15 months of work and are excluded from the calculation. Contractor responses are consistent with these expected heterogeneous responses but inconsistent with state intentions, suggesting public entities should anticipate strategic behavior when crafting performance-based incentives.
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Publisher Info
Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number
88.
Find related papers by JEL classification: H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
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