This paper presents estimates of the average cost of the workers' compensation insurance program for a homogeneous group of employers by state. These estimates are of interest because they reflect the operation, direct nominal costs, and efficiency of workers' compensation. The paper estimates cost equations for a variety of alternative specifications. The main finding is that when cost equations are estimated by ordinary least squares there is a unit elasticity of costs with respect to benefits, but instrumental variable estimates of the effect of benefits yield a greater than unit elasticity. The results also indicate that the presence of a state insurance fund is associated with higher average costs to employers, all else equal. Finally, we explore the impact that the minimum standards recommended by the National Commission on State Workmen's Compensation Laws would have on workers' compensation costs.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
3029.
Length: Date of creation: Jul 1989 Date of revision: Handle: RePEc:nbr:nberwo:3029
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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.
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Weiss, Yoram, 1976.
"The Wealth Effect in Occupational Choice,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 292-307, June.
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