IDEAS home Printed from https://ideas.repec.org/a/aea/aejapp/v16y2024i3p436-81.html

The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications

Author

Listed:
  • Marika Cabral
  • Marcus Dillender

Abstract

Leveraging unique administrative data and a sharp increase in benefit generosity in a difference-in-differences research design, we estimate the impact of workers' compensation wage replacement benefits on individual behavior and program costs. We find that increased benefit generosity leads to longer income benefit durations and increased medical spending. Responses along these two margins are equally important drivers of increased program costs, collectively increasing program costs 1.4 times the mechanical increase in costs. Using these estimates and an estimate of the consumption drop among injured workers, our welfare calibrations suggest that a marginal increase in benefit generosity would not improve welfare.

Suggested Citation

  • Marika Cabral & Marcus Dillender, 2024. "The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 436-481, July.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:3:p:436-81
    DOI: 10.1257/app.20220032
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/app.20220032
    Download Restriction: no
    File URL: https://doi.org/10.3886/E191781V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20220032.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20220032.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/app.20220032?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. Rahi Abouk & Keshar M. Ghimire & Johanna Catherine Maclean & David Powell, 2023. "Pain Management and Work Capacity: Evidence From Workers’ Compensation and Marijuana Legalization," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(3), pages 737-770, June.
    2. 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).
    3. Corey J.M. Williams & Kole Reddig & Adam Nowak, "undated". "Collectible Pricing and Collector Utility: The Role of Production Commitments," Working Papers 24-03, Department of Economics, West Virginia University.
    4. Koning, Pierre & van Lent, Max, 2022. "Workers' Moral Hazard and Insurer Effort in Disability Insurance," IZA Discussion Papers 15164, Institute of Labor Economics (IZA).
    5. Donou-Adonsou, Ficawoyi, 2022. "The effects of health conditions on financial sector development," Economic Modelling, Elsevier, vol. 114(C).
    6. Xiuming Dong & Johanna Catherine Maclean & David Powell, 2024. "Social Insurance Spillovers: Evidence From Paid Sick Leave Mandates and Workers' Compensation," NBER Working Papers 32751, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • 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:aejapp:v:16:y:2024:i:3:p:436-81. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.