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When to Start a Fight and When to Fight Back: Liability Disputes in the Workers' Compensation System

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  • David Card
  • Brian P. McCall

Abstract

Contrary to the original intention of no-fault workers' compensation laws, employers deny liability for a substantial fraction of on-the-job injuries. We develop and estimate a simple structural model that explains the high rate of litigation as a consequence of asymmetric information. We estimate the model using data for a large sample of back injuries in Minnesota. Simulations under the counterfactual assumption that all denied workers pursue their claims suggest that the strategic incentive accounts for 30%-40% of observed liability disputes. (c) 2009 by The University of Chicago.

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  • David Card & Brian P. McCall, 2009. "When to Start a Fight and When to Fight Back: Liability Disputes in the Workers' Compensation System," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 149-178, April.
    • Handle: RePEc:ucp:jlabec:v:27:y:2009:i:2:p:149-178
    DOI: 10.1086/598349
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    References listed on IDEAS

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    1. Peter S. Barth & H. Allan Hunt, 1980. "Workers' Compensation and Work-Related Illnesses and Diseases," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number psbhah1980.
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    5. Price V. Fishback & Shawn Everett Kantor, 2000. "A Prelude to the Welfare State: The Origins of Workers' Compensation," NBER Books, National Bureau of Economic Research, Inc, number fish00-1, October.
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    9. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
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    Cited by:

    1. Erin Todd Bronchetti & Melissa McInerney, 2012. "Revisiting Incentive Effects in Workers' Compensation: Do Higher Benefits Really Induce More Claims?," ILR Review, Cornell University, ILR School, vol. 65(2), pages 286-315, April.
    2. Henri Fraisse & Francis Kramarz & Corinne Prost, 2015. "Labor Disputes and Job Flows," ILR Review, Cornell University, ILR School, vol. 68(5), pages 1043-1077, October.
    3. Henry Fraisse & Kramarz, F. & Prost, C., 2009. "Labor Court Inputs, Judicial Cases Outcomes and Labor Flows: Identifying Real EPL," Working papers 256, Banque de France.
    4. Pecorino Paul & Van Boening Mark, 2014. "Bargaining with Asymmetric Dispute Costs," Review of Law & Economics, De Gruyter, vol. 10(1), pages 31-58, March.

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    More about this item

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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