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Unresolved Conflict in Workers' Compensation: The Impact of Legal Representation on Workers' Compensation Benefits

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Listed:
  • Bogdan Savych
  • David Neumark

Abstract

We estimate the causal effect of attorney involvement on the indemnity benefits workers receive after their injuries. To address the fundamental challenge that claims and injuries may differ on unmeasured dimensions that affect both attorney involvement and benefits received, we propose and use two instruments. The first is the baseline local area attorney involvement rate derived from a subset of claims for fractures, lacerations, and contusions without permanent partial disability and/or lump-sum payments. The second instrument is a delay in the first indemnity payment. Our outcome is the total indemnity benefits that workers receive after their injuries, which captures payments to workers for time lost from work and other adverse effects of an injury. Our analysis of more than 950,000 claims with more than seven days of lost time indicates that attorney involvement substantially increases total indemnity benefits paid to workers.

Suggested Citation

  • Bogdan Savych & David Neumark, 2024. "Unresolved Conflict in Workers' Compensation: The Impact of Legal Representation on Workers' Compensation Benefits," NBER Working Papers 33210, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33210
    Note: EH LE LS PE
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    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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