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The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy

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  • Krueger, Alan B
  • Burton, John F, Jr

Abstract

New estimates of the average cost of workers' compensation insurance for a homogeneous group of employers by state are presented. These data are used to estimate cost equations for a variety of alternative specifications. The main finding is that when cost equations are estimated by ordinary least squares there is a unit elasticity of costs with respect to benefits, but instrumental variable estimates of the effect of benefits yield a greater than unit elasticity. Finally, the presence of a state insurance fund is associated with higher average costs for employers, all else equal. Copyright 1990 by MIT Press.

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  • Krueger, Alan B & Burton, John F, Jr, 1990. "The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 228-240, May.
    • Handle: RePEc:tpr:restat:v:72:y:1990:i:2:p:228-40
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    1. Viscusi, W Kip & Moore, Michael J, 1987. "Workers' Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 249-261, May.
    2. Thomas J. Kniesner & John D. Leeth, 1989. "Separating the Reporting Effects from the Injury Rate Effects of Workers' Compensation Insurance: A Hedonic Simulation," ILR Review, Cornell University, ILR School, vol. 42(2), pages 280-293, January.
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    4. Butler, Richard J & Worrall, John D, 1983. "Workers' Compensation: Benefit and Injury Claims Rates in the Seventies," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 580-589, November.
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    6. Ronald G. Ehrenberg, 1985. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc.
    7. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
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    9. H. Allan Hunt & Alan B. Krueger & John F. Burton Jr., 1988. "The Impact of Open competition in Michigan on the Employers' costs of Workers' Compensation," Book chapters authored by Upjohn Institute researchers, in: Workers' Compensation Insurance Pricing: Current Programs and Proposed Reform, pages 109-144, W.E. Upjohn Institute for Employment Research.
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    Cited by:

    1. Erin Todd Bronchetti & Melissa McInerney, 2012. "Revisiting Incentive Effects in Workers' Compensation: Do Higher Benefits Really Induce More Claims?," ILR Review, Cornell University, ILR School, vol. 65(2), pages 286-315, April.
    2. Nicolas R. Ziebarth, 2018. "Social Insurance and Health," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 57-84, Emerald Group Publishing Limited.
    3. Alan B. Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    4. Alan Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    5. Alison Morantz, 2010. "Opting Out of Workers' Compensation in Texas: A Survey of Large, Multistate Nonsubscribers," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 197-238, National Bureau of Economic Research, Inc.
    6. Butler, Richard J. & Hartwig, Robert P. & Gardner, Harold, 1997. "HMOs, moral hazard and cost shifting in workers' compensation," Journal of Health Economics, Elsevier, vol. 16(2), pages 191-206, April.
    7. Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc.
    8. Barry T. Hirsch & David A. MacPherson & J. Michael Dumond, 1997. "Workers#x0027; Compensation Recipiency in Union and Nonunion Workplaces," ILR Review, Cornell University, ILR School, vol. 50(2), pages 213-236, January.
    9. Kelly D. Edmiston, 2006. "Workers’ Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145, February.
    10. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 111-144, National Bureau of Economic Research, Inc.
    11. James D. Hamilton & Michael T. Owyang, 2012. "The Propagation of Regional Recessions," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 935-947, November.
    12. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, vol. 41(1), pages 73-99, February.
    13. Krueger, Alan B., 2000. "From Bismarck to Maastricht: The March to European Union and the Labor Compact1," Labour Economics, Elsevier, vol. 7(2), pages 117-134, March.
    14. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    15. Xuguang (Steve) Guo & John F. Burton Jr., 2010. "Workers' Compensation: Recent Developments in Moral Hazard and Benefit Payments," ILR Review, Cornell University, ILR School, vol. 63(2), pages 340-355, January.
    16. Andy Yuan & Price V. Fishback, 2020. "Rising Burdens of Proofs and The Grand Bargain of Workers’ Compensation Laws," NBER Working Papers 26980, National Bureau of Economic Research, Inc.
    17. Kyyrä, Tomi & Tuomala, Juha, 2013. "Does Experience Rating Reduce Disability Inflow?," IZA Discussion Papers 7344, Institute of Labor Economics (IZA).

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