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The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy

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  • Krueger, Alan B
  • Burton, John F, Jr

Abstract

New estimates of the average cost of workers' compensation insurance for a homogeneous group of employers by state are presented. These data are used to estimate cost equations for a variety of alternative specifications. The main finding is that when cost equations are estimated by ordinary least squares there is a unit elasticity of costs with respect to benefits, but instrumental variable estimates of the effect of benefits yield a greater than unit elasticity. Finally, the presence of a state insurance fund is associated with higher average costs for employers, all else equal. Copyright 1990 by MIT Press.

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  • 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.
  • Handle: RePEc:tpr:restat:v:72:y:1990:i:2:p:228-40
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    References listed on IDEAS

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    1. 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.
    2. Ronald G. Ehrenberg, 1985. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc.
    3. Thomas J. Kniesner & John D. Leeth, 1989. "Separating the Reporting Effects from the Injury Rate Effects of Workers' Compensation Insurance: A Hedonic Simulation," ILR Review, Cornell University, ILR School, vol. 42(2), pages 280-293, January.
    4. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    5. Butler, Richard J & Worrall, John D, 1983. "Workers' Compensation: Benefit and Injury Claims Rates in the Seventies," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 580-589, November.
    6. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
    7. Hamermesh, Daniel S & Wolfe, John R, 1990. "Compensating Wage Differentials and the Duration of Wage Loss," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 175-197, January.
    8. H. Allan Hunt & Alan B. Krueger & John F. Burton Jr., 1988. "The Impact of Open competition in Michigan on the Employers' costs of Workers' Compensation," Book chapters authored by Upjohn Institute researchers,in: Workers' Compensation Insurance Pricing: Current Programs and Proposed Reform, pages 109-144 W.E. Upjohn Institute for Employment Research.
    9. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
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    Cited by:

    1. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, vol. 41(1), pages 73-99, February.
    3. 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.
    4. Kelly D. Edmiston, 2006. "Workers' Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145.
    5. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 111-144 National Bureau of Economic Research, Inc.
    6. Alan B. Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    7. Ziebarth, Nicolas R., 2017. "Social Insurance and Health," IZA Discussion Papers 10918, Institute for the Study of Labor (IZA).
    8. Krueger, Alan B., 2000. "From Bismarck to Maastricht: The March to European Union and the Labor Compact1," Labour Economics, Elsevier, vol. 7(2), pages 117-134, March.
    9. Alan Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    10. 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.

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