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Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries

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  • John W. Ruser

Abstract

This article examines how an increase in workers' compensation indemnity benefits affects injury rates when firms are experience-rated to varying degrees. The theoretical model shows that an increase in benefits has a smaller effect on injury rates in more highly experience-rated firms. Since an institutional characteristic of workers' compensation insurance is that larger firms tend to be more highly experience-rated, the empirically testable hypothesis is that there is a smaller relationship between benefits and injury rates in larger firms. The hypothesis is tested with injury rate regressions estimated by using data on 25 three-digit U.S. manufacturing industries for the years 1972-1979. Support for the hypothesis is found when the frequency of all injuries is the dependent variable, but the evidence for the hypothesis is less strong when the dependent variable is the frequency of lost-workday injuries.

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  • John W. Ruser, 1985. "Workers' Compensation Insurance, Experience-Rating, and Occupational Injuries," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 487-503, Winter.
  • Handle: RePEc:rje:randje:v:16:y:1985:i:winter:p:487-503
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    References listed on IDEAS

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    Cited by:

    1. Dhaval Dave & Robert Kaestner, 2009. "Health insurance and ex ante moral hazard: evidence from Medicare," International Journal of Health Economics and Management, Springer, vol. 9(4), pages 367-390, December.
    2. de Groot, Nynke & Koning, Pierre, 2016. "Assessing the effects of disability insurance experience rating. The case of The Netherlands," Labour Economics, Elsevier, vol. 41(C), pages 304-317.
    3. Pascale Lengagne, 2016. "Experience Rating and Work-Related Health and Safety," Journal of Labor Research, Springer, vol. 37(1), pages 69-97, March.
    4. Fortin, Bernard, 1997. "Dépendance à l’égard de l’aide sociale et réforme de la sécurité du revenu," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(4), pages 557-573, décembre.
    5. Butler, Richard J. & Hartwig, Robert P. & Gardner, Harold, 1997. "HMOs, moral hazard and cost shifting in workers' compensation," Journal of Health Economics, Elsevier, vol. 16(2), pages 191-206, April.
    6. Fortin, Bernard & Lanoie, Paul, 1998. "Effects of Workers' Compensation: A Survey," Cahiers de recherche 9816, Université Laval - Département d'économique.
    7. Danzon, Patricia M & Harrington, Scott E, 2001. "Worker's Compensation Rate Regulation: How Price Controls Increase Costs," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 1-36, April.
    8. Xiangdong Wei & Steve Russell & Robert Sandy, 2005. "Analysing workplace safety policies in hong kong with a simulation method," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 321-353.
    9. Pascale Lengagne & Anissa Afrite, 2015. "Experience Rating, Incidence of Musculoskeletal Disorders and Related Absences.Results from a Natural Experiment," Working Papers DT69, IRDES institut for research and information in health economics, revised Jul 2015.
    10. Pascale Lengagne, 2015. "Workers Compensation Insurance: Incentive Effects of Experience Rating on Work-related Health and Safety," Working Papers DT64, IRDES institut for research and information in health economics, revised Jan 2015.
    11. Kaestner, Robert & Grossman, Michael, 1998. "The effect of drug use on workplace accidents," Labour Economics, Elsevier, vol. 5(3), pages 267-294, September.
    12. Dhaval M. Dave & Robert Kaestner & George L. Wehby, 2015. "Does Medicaid Coverage for Pregnant Women Affect Prenatal Health Behaviors?," NBER Working Papers 21049, National Bureau of Economic Research, Inc.
    13. Thomas J. Kniesner & John D. Leeth, 2000. "Workplace Safety Policy: Past, Present, and Future," Center for Policy Research Policy Briefs 19, Center for Policy Research, Maxwell School, Syracuse University.
    14. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, pages 73-99.
    15. Darius N Lakdawalla & Robert T Reville & Seth A Seabury, 2007. "How Does Health Insurance Affect Workers' Compensation Filing?," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 286-303, April.
    16. Vikström, Johan, 2009. "The effect of employer incentives in social insurance on individual wages," Working Paper Series 2009:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    17. 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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