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Moral Hazard In Worker'S Compensation Insurance

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  • KRUEGER, A.B.

Abstract

This paper uses longitudinal CPS data on a large sample of workers to estimate the determinants of participation in state workers' compensation programs in the United States. The principal finding is that higher workers' compensation benefits are associated with greater participation in the workers' compensation program, after allowing for worker characteristics, state dummy variables and other aspects of the workers' compensation law. Moreover, this result holds for both manufacturing and nonmanufacturing workers. Workers' compensation benefits, however, have an insignificant effect on program participation for the sample of women. Overall, a 10% increase in benefits is associated with a 7.1% increase in program participation. In addition, the results show that the waiting period that is required before benefit payments begin has a substantial negative effect on participation in the workers' compensation program. Finally, with the exception of unemployment insurance, there is little evidence that workers are comparatively more likely to participate in other social insurance programs while they are collecting workers' compensation benefits.
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Suggested Citation

  • Krueger, A.B., 1988. "Moral Hazard In Worker'S Compensation Insurance," Papers 31, Princeton, Woodrow Wilson School - Discussion Paper.
  • Handle: RePEc:fth:priwdp:31
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    References listed on IDEAS

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    1. Lovell, Michael C, 1986. "Tests of the Rational Expectations Hypothesis," American Economic Review, American Economic Association, vol. 76(1), pages 110-124, March.
    2. John H. Kareken, 1983. "Deposit insurance reform or deregulation is the cart, not the horse," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr.
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    7. N. Gregory Mankiw & Matthew D. Shapiro, 1986. "News or Noise? An Analysis of GNP Revisions," NBER Working Papers 1939, National Bureau of Economic Research, Inc.
    8. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", pages 125-132.
    9. Zarnowitz, Victor, 1985. "Rational Expectations and Macroeconomic Forecasts," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 293-311, October.
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    Cited by:

    1. Fortin, Bernard, 1997. "Dépendance à l’égard de l’aide sociale et réforme de la sécurité du revenu," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(4), pages 557-573, décembre.
    2. Paul Lanoie & Sophie Tavenas, 1995. "Costs and Benefits of Preventing Workplace Accidents: The Case of Participatory Ergonomics," CIRANO Working Papers 95s-38, CIRANO.
    3. Paul Lanoie & Louis Trottier, 1995. "Costs and Benefits of Preventing Workplace Accidents : Going from a Mechanical to a Manual Handling System," CIRANO Working Papers 95s-45, CIRANO.
    4. Fortin, Bernard & Lanoie, Paul, 1998. "Effects of Workers' Compensation: A Survey," Cahiers de recherche 9816, Université Laval - Département d'économique.
    5. Denis Bolduc & Bernard Fortin & France Labrecque & Paul Lanoie, 1997. "Incentive Effects of Public Insurance Programs on the Occurence and the Composition of Workplace Injuries," CIRANO Working Papers 97s-24, CIRANO.

    More about this item

    Keywords

    compensation ; workers ; insurance;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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