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Precautionary Saving, Insurance, and the Origins of Workers' Compensation

  • Kantor, Shawn Everett
  • Fishback, Price V

In this article, the authors test whether the introduction of social insurance has led to a reduction in private insurance purchases and precautionary saving by examining the introduction of workers' compensation. Their empirical analysis is based on the financial decisions of over 7,000 households surveyed for the 1917-19 Bureau of Labor Statistics cost-of-living study. The authors find that the presence of workers' compensation at least partially crowded out private accident insurance and led to a substantial reduction in precautionary saving. The introduction of workers' compensation caused private saving to fall by approximately 25 percent, with other factors held constant. Copyright 1996 by University of Chicago Press.

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File URL: http://dx.doi.org/10.1086/262029
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 104 (1996)
Issue (Month): 2 (April)
Pages: 419-442

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Handle: RePEc:ucp:jpolec:v:104:y:1996:i:2:p:419-42
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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