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Is Workers' Compensation a Substitute for Unemployment Insurance?

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  • Fortin, Bernard
  • Lanoie, Paul
  • Laporte, Christine

Abstract

This paper examines how the Workers' Compensation (WC) and Unemployment Insurance (UI) programs interact to influence the duration of claims due to workplace accidents. We use longitudinal WC administrative micro-data on more than 30,000 workers in the Canadian construction industry for the period 1976-1986. For the estimations, we use the Meyer (1990) semi-parametric proportional hazard model. Our results show, in particular, that a reduction in the UI replacement ratio is associated with an increase in the duration of claims due to severe accidents that are difficult to diagnose. Moreover, the duration of spells on WC is much higher when an accident occurs in December, a month which corresponds to the beginning of the lay-off season in the construction sector. This result is consistent with the fact that WC benefits are more generous than UI benefits in Canada. Copyright 1999 by Kluwer Academic Publishers

Suggested Citation

  • Fortin, Bernard & Lanoie, Paul & Laporte, Christine, 1999. "Is Workers' Compensation a Substitute for Unemployment Insurance?," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 165-188, August.
    • Handle: RePEc:kap:jrisku:v:18:y:1999:i:2:p:165-88
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    Cited by:

    1. Guadalupe, Maria, 2003. "The hidden costs of fixed term contracts: the impact on work accidents," Labour Economics, Elsevier, vol. 10(3), pages 339-357, June.
    2. Kelly D. Edmiston, 2006. "Workers’ Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145, February.
    3. Stephen Whelan, 2010. "The Interaction between Income Support Programs," LABOUR, CEIS, vol. 24(4), pages 407-440, December.
    4. Ángel Martín-Román & Alfonso Moral, 2017. "A methodological proposal to evaluate the cost of duration moral hazard in workplace accident insurance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(9), pages 1181-1198, December.
    5. Eric Levin & Robert Wright, 2001. "Unemployment insurance, moral hazard, and economic growth," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(4), pages 373-384, November.

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