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Claims Reporting and Risk Bearing Moral Hazard in Workers' Compensation : The Canadian Context

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  • Guylaine Baril
  • Paul Lanoie

Abstract

This paper explores the Canadian context of workers' compensation (WC) by replicating, with Canadian data, a study carried out by Butler and Worrall (1991). These authors were the first to develop a simple model to separate claims reporting and risk bearing moral hazard in WC. Risk bearing moral hazard reflects the workers' incentive to carry more risk and consequently experience more accidents when benefits rise, while claims reporting moral hazard mirrors workers' incentive to file a claim. The estimation of these two moral hazard effects leads to results quite different with Canadian data than with American data. Ce texte explore les mécanismes canadiens d'indemnisations pour accidents du travail en reproduisant avec des données canadiennes l'étude de Butler et Worrall (1991). Ces auteurs furent les premiers à développer un modèle simple pour distinguer deux types de risque moral liés à l'indemnisation des accidents du travail : Le risque lié au comportement préventif et le risque lié à la déclaration d'accidents. Le premier est associé à la tendance des travailleurs de prendre plus de risque lorsque la générosité des indemnisations augmente, alors que le second est associé à leur propension à faire une réclamation lorsqu'ils ont un accident. L'estimation de ces deux types de risque moral, avec des données canadiennes, donne des résultats trés différents de ceux présentés par Butler et Worrall.

Suggested Citation

  • Guylaine Baril & Paul Lanoie, 1996. "Claims Reporting and Risk Bearing Moral Hazard in Workers' Compensation : The Canadian Context," CIRANO Working Papers 96s-05, CIRANO.
  • Handle: RePEc:cir:cirwor:96s-05
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    File URL: http://www.cirano.qc.ca/files/publications/96s-05.pdf
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    References listed on IDEAS

    as
    1. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, vol. 41(1), pages 73-99, February.
    2. Bruce, Christopher J & Atkins, Frank J, 1993. "Efficiency Effects of Premium-Setting Regimes under Workers' Compensation: Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 38-69, January.
    3. Fortin, Bernard & Lanoie, Paul, 1992. "Substitution between unemployment insurance and workers' compensation : An analysis applied to the risk of workplace accidents," Journal of Public Economics, Elsevier, vol. 49(3), pages 287-312, December.
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