Workers' Compensation and Injury Duration: Evidence from a Natural Experiment / Bruce D. Meyer, W. Kip Viscusi, David L. Durbin.

Format:

Book

Author/Creator:

Meyer, Bruce D.

Contributor:

National Bureau of Economic Research.

Viscusi, W. Kip.

Durbin, David L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3494.

NBER working paper series no. w3494

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Workers' Compensation and Injury Duration

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1990.

Summary:

This paper examines the effect of workers' compensation on the time until an injured worker returns to work. Two large increases in the maximum weekly benefit amount in Kentucky am Michigan are examined. The increases raised the benefit amount for high earnings individuals by over sixty percent, while low earnings individuals, who did not earn enough to be eligible for the old maximum, did not experience a change in their incentives. A comparison of the behavior of pecp1e injured the year before the benefit increases to those injured the year after provides an estimate of the effect of higher benefits on injury duration. This use of a "natural experiment" allows us to separate the effect of the level of the benefits from the effect of previous earnings, which is a common difficulty in the analysis of social insurance programs. The analysis uses individual records from a large number of insurance companies. Time out of work increases dramatically for those groups eligible for the higher benefits, while those whose benefits do not change do not experience a change in duration. The estimates suggest large moral hazard effects of higher benefits, with the estimated elasticity of spell duration with respect to benefits of approximately .3 to .4.

Notes:

Print version record

October 1990.