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Workers' Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses

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  • Viscusi, W Kip
  • Moore, Michael J

Abstract

Using the 1977 Quality of Employment Survey in conjunction with BLS risk series and state workers' compensation benefit formulas, the authors assess the labor market implications of workers' compensation. Higher levels of workers' compensation benefits reduce wage levels, and controlling for workers' compensation raises estimates of compensating differentials for risk. The rate of trade- off between wages and workers' compensation suggests that benefit levels provide suboptimal levels of income insurance, abstracting from moral hazard considerations. The value of nonmonetary losses from job injuries (including pain and suffering and nonwork disability), is estimated to be $17,000 to $26,000. Copyright 1987 by MIT Press.

Suggested Citation

  • Viscusi, W Kip & Moore, Michael J, 1987. "Workers' Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 249-261, May.
  • Handle: RePEc:tpr:restat:v:69:y:1987:i:2:p:249-61
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    Cited by:

    1. G. Dionne & P. Lanoie, 2002. "How to Make a Public Choice about the Value of a Statistical Life : The Case of Road Safety," THEMA Working Papers 2002-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    2. Carrie H. Colla & William H. Dow & Arindrajit Dube, 2011. "The Labor Market Impact of Employer Health Benefit Mandates: Evidence from San Francisco's Health Care Security Ordinance," NBER Working Papers 17198, National Bureau of Economic Research, Inc.
    3. Krueger, Alan B & Burton, John F, Jr, 1990. "The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 228-240, May.
    4. S. Madheswaran, 2008. "Measuring the Value of Life and Limb: Estimating Compensating Wage Differentials Among Workers in Chennai and Mumbai," Working Papers id:1708, eSocialSciences.
    5. Nastis, Stefanos A. & Michailidis, Anastasios, 2010. "Hazardous Agrochemicals, Smoking, and Farmers’ Differences in Wage-Risk Tradeoffs," 120th Seminar, September 2-4, 2010, Chania, Crete 109389, European Association of Agricultural Economists.
    6. 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.
    7. Konstantinos, Pouliakas & Ioannis, Theodossiou, 2010. "An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work," MPRA Paper 20336, University Library of Munich, Germany.
    8. repec:bla:indres:v:56:y:2017:i:1:p:122-160 is not listed on IDEAS
    9. Jonathan Gruber & Julie Berry Cullen, 1996. "Spousal Labor Supply as Insurance: Does Unemployment Insurance Crowd Outthe Added Worker Effect?," NBER Working Papers 5608, National Bureau of Economic Research, Inc.
    10. Kelly D. Edmiston, 2006. "Workers' Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145.
    11. Murray, John E. & Nilsson, Lars, 2007. "Accident risk compensation in late imperial Austria: Wage differentials and social insurance," Explorations in Economic History, Elsevier, vol. 44(4), pages 568-587, October.
    12. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1912-1946, December.
    13. Kaestner, Robert & Grossman, Michael, 1998. "The effect of drug use on workplace accidents," Labour Economics, Elsevier, vol. 5(3), pages 267-294, September.
    14. 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.
    15. Konstantinos Pouliakas & Ioannis Theodossiou, 2013. "The Economics Of Health And Safety At Work: An Interdiciplinary Review Of The Theory And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 167-208, February.

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