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The Political Economy of Workers' Compensation Benefit Levels, 1910-1930

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  • Fishback, Price V.
  • Kantor, Shawn Everett

Abstract

Although workers, employers, and insurance companies by 1910 supported the adoption of workers' compensation, they fiercely debated the specific features of the legislation. In this paper we examine how workers' compensation benefit levels were determined in the political process of forging compromises across interest groups, and even within individual groups. A quantitative analysis of the benefit levels in each state between the time of adoption and 1930 shows several important trends. Employers in dangerous industries effectively imposed limits on accident benefits, while organized labor and the commissions that administered the laws were instrumental in achieving higher expected benefit levels. Political reformers that gained control of state legislatures in the early twentieth century aided organized labor in achieving their goal of improving workers' compensation accident benefits. The paper also presents case-studies of the political struggle over benefits that occurred in" three states -- Ohio, Minnesota, and Missouri. These qualitative descriptions of the fight over benefit levels provide a more detailed picture of the political process through which workers' compensation was created because the cross-state quantitative study largely abstracts away from the political nuances that shaped workers' compensation legislation.
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Suggested Citation

  • Fishback, Price V. & Kantor, Shawn Everett, 1998. "The Political Economy of Workers' Compensation Benefit Levels, 1910-1930," Explorations in Economic History, Elsevier, vol. 35(2), pages 109-139, April.
  • Handle: RePEc:eee:exehis:v:35:y:1998:i:2:p:109-139
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    References listed on IDEAS

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    1. repec:cup:apsrev:v:80:y:1986:i:01:p:89-106_18 is not listed on IDEAS
    2. Gilligan, Thomas W & Marshall, William J & Weingast, Barry R, 1989. "Regulation and the Theory of Legislative Choice: The Interstate Commerce Act of 1887," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 35-61, April.
    3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    4. Katherine Baicker & Claudia Goldin & Lawrence F. Katz, 1998. "A Distinctive System: Origins and Impact of U.S. Unemployment Compensation," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 227-264 National Bureau of Economic Research, Inc.
    5. Price V. Fishback & Shawn Everett Kantor, 1995. "Did Workers Pay for the Passage of Workers' Compensation Laws?," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 713-742.
    6. Kantor, Shawn Everett & Fishback, Price V, 1996. "Precautionary Saving, Insurance, and the Origins of Workers' Compensation," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 419-442, April.
    7. Danzon, Patricia M, 1988. "The Political Economy of Workers' Compensation: Lessons for Product Liability," American Economic Review, American Economic Association, vol. 78(2), pages 305-310, May.
    8. Shawn Everett Kantor & Price V. Fishback, 1994. "Coalition Formation and the Adoption of Workers? Compensation: The Case of Missouri, 1911 to 1926," NBER Chapters,in: The Regulated Economy: A Historical Approach to Political Economy, pages 259-298 National Bureau of Economic Research, Inc.
    9. Fishback, Price V. & Kantor, Shawn Everett, 1996. "The Durable Experiment: State Insurance of Workers' Compensation Risk in the Early Twentieth Century," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 809-836, December.
    10. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
    11. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
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    Cited by:

    1. Caruthers, Bruce G. & Guinnane, Timothy W. & Lee, Yoonseok, 2009. "Bringing "Honest Capital" to Poor Borrowers: The Passage of the Uniform Small Loan Law, 1907-1930," Working Papers 63, Yale University, Department of Economics.
    2. Alison Morantz, 2010. "Opting Out of Workers' Compensation in Texas: A Survey of Large, Multistate Nonsubscribers," NBER Chapters,in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 197-238 National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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