IDEAS home Printed from https://ideas.repec.org/p/ags/yaleeg/130879.html
   My bibliography  Save this paper

Incentives that saved lives: Government regulation of accident insurance associations in Germany, 1884-1914

Author

Listed:
  • Guinnane, Timothy W.
  • Streb, Jochen

Abstract

The German government introduced compulsory accident insurance for industrial firms in 1884. This insurance scheme was one of the main pillars of Bismarck’s famous social insurance system. The accident-insurance system achieved only one of its intended goals: it successfully compensated workers and their survivors for losses due to accidents. The accident-insurance system was less successful in limiting the growth of work-related accidents, although that goal had been a reason for the system’s creation. We trace the failure to stem the growth of accidents to faulty incentives built into the 1884 legislation. The law created mutual insurance groups that used an experience-rating system that stressed group rather than firm experience, leaving firms with little hope of saving on insurance contributions by improving the safety of their own plants. The government regulator increasingly stressed the imposition of safety rules that would force all firms to adopt certain safety practices. Econometric analysis shows that even the flawed tools available to the insurance groups were powerful, and that more consistent use would have reduced industrial accidents earlier and more extensively.

Suggested Citation

  • Guinnane, Timothy W. & Streb, Jochen, 2012. "Incentives that saved lives: Government regulation of accident insurance associations in Germany, 1884-1914," Center Discussion Papers 130879, Yale University, Economic Growth Center.
    • Handle: RePEc:ags:yaleeg:130879
    DOI: 10.22004/ag.econ.130879
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/130879/files/DP%201013.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.130879?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jopp, Tobias Alexander, 2011. "Old Times, Better Times? German Miners' Knappschaften, Pay-as-you-go Pensions, and Implicit Rates of Return, 1854–1913," Ruhr Economic Papers 238, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Guinnane, Timothy W. & Streb, Jochen, 2011. "Moral Hazard in a Mutual Health Insurance System: German Knappschaften, 1867–1914," The Journal of Economic History, Cambridge University Press, vol. 71(1), pages 70-104, March.
    3. Jopp, Tobias Alexander, 2012. "Insurance, size and exposure to actuarial risk: empirical evidence from nineteenth- and early twentieth-century German Knappschaften1," Financial History Review, Cambridge University Press, vol. 19(1), pages 75-116, April.
    4. Tobias A. Jopp, 2011. "Old times, better times? German miners' Knappschaften , pay-as-you-go pensions, and implicit rates of return, 1854--1913," Business History, Taylor & Francis Journals, vol. 53(7), pages 1018-1043, December.
    5. Mares,Isabela, 2003. "The Politics of Social Risk," Cambridge Books, Cambridge University Press, number 9780521534772, October.
    6. Price V. Fishback & Shawn Everett Kantor, 2000. "A Prelude to the Welfare State: The Origins of Workers' Compensation," NBER Books, National Bureau of Economic Research, Inc, number fish00-1.
    7. repec:zbw:rwirep:0238 is not listed on IDEAS
    8. Guinnane, Timothy W., 2001. "Cooperatives As Information Machines: German Rural Credit Cooperatives, 1883–1914," The Journal of Economic History, Cambridge University Press, vol. 61(2), pages 366-389, June.
    9. repec:zbw:rwirep:0163 is not listed on IDEAS
    10. Fishback, Price V. & Kantor, Shawn Everett, 2000. "A Prelude to the Welfare State," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226251639.
    11. Jopp, Tobias Alexander, 2010. "The welfare state evolves: German Knappschaften, 1854 - 1923," FZID Discussion Papers 16-2010, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    12. Mares,Isabela, 2003. "The Politics of Social Risk," Cambridge Books, Cambridge University Press, number 9780521827416, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John E. Murray & Javier Silvestre, 2015. "Small-scale technologies and European coal mine safety, 1850–1900," Economic History Review, Economic History Society, vol. 68(3), pages 887-910, August.
    2. Lehmann-Hasemeyer, Sibylle & Streb, Jochen, 2017. "Does Social Security crowd out Private Savings? The Case of Bismarck’s System of Social Insurance," IBF Paper Series 06-17, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:zbw:rwirep:0364 is not listed on IDEAS
    2. Timothy Guinnane & Jochen Streb, 2012. "Incentives that Saved Lives: Government Regulation of Accident Insurance Associations in Germany, 1884–1914," Ruhr Economic Papers 0364, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Lehmann-Hasemeyer, Sibylle & Streb, Jochen, 2017. "Does Social Security crowd out Private Savings? The Case of Bismarck’s System of Social Insurance," IBF Paper Series 06-17, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    4. Guinnane, Timothy & Streb, Jochen, 2019. "Bismarck to no Effect: Fertility Decline and the Introduction of Social Insurance in Prussia," Working Papers 13, German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin.
    5. Timothy W. Guinnane, 2011. "The Historical Fertility Transition: A Guide for Economists," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 589-614, September.
    6. Cusack, Thomas R. & Iversen, Torben & Soskice, David, 2007. "Economic interests and the origins of electoral systems," Discussion Papers, Research Unit: Institutions, States, Markets SP II 2007-07, WZB Berlin Social Science Center.
    7. Price V. Fishback & Rebecca Holmes & Samuel Allen, 2008. "Lifting the Curse of Dimensionality: Measures of the Labor Legislation Climate in the States During the Progressive Era," NBER Working Papers 14167, National Bureau of Economic Research, Inc.
    8. Boal, William M., 2018. "Work intensity and worker safety in early twentieth-century coal mining," Explorations in Economic History, Elsevier, vol. 70(C), pages 132-149.
    9. Viarengo, Martina, 2007. "An historical analysis of the expansion of compulsory schooling in Europe after the Second World War," Economic History Working Papers 4286, London School of Economics and Political Science, Department of Economic History.
    10. Lars Fredrik Andersson & Liselotte Eriksson, 2016. "Voluntary or compulsory? Exploring dynamics of mutual cooperative formation in Swedish health insurance at the turn of the twentieth century," Working Papers 16007, Economic History Society.
    11. Höpner, Martin & Waclawczyk, Maximilian, 2012. "Opportunismus oder Ungewissheit? Mitbestimmte Unternehmen zwischen Klassenkampf und Produktionsregime," MPIfG Discussion Paper 12/1, Max Planck Institute for the Study of Societies.
    12. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
    13. Alston, Lee J. & Dupre, Ruth & Nonnenmacher, Tomas, 2002. "Social reformers and regulation: the prohibition of cigarettes in the United States and Canada," Explorations in Economic History, Elsevier, vol. 39(4), pages 425-445, October.
    14. Busemeyer, Marius R., 2011. "Varieties of cross-class coalitions in the politics of dualization: Insights from the case of vocational training in Germany," MPIfG Discussion Paper 11/13, Max Planck Institute for the Study of Societies.
    15. Hyun Kyoung Kim, 2017. "From a dualized labor market to a dualized welfare state: Employment insecurity and welfare state development in South Korea," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 20(1), pages 76-93, March.
    16. Carruthers, Bruce G. & Guinnane, Timothy W. & Lee, Yoonseok, 2009. "Bringing "Honest Capital" to Poor Borrowers: The Passage of the Uniform Small Loan Law, 1907-1930," Center Discussion Papers 50949, Yale University, Economic Growth Center.
    17. Matthew Carnes & Isabela Mares, 2016. "Redefining Who’s ‘In’ and Who’s ‘Out’: Explaining Preferences for Redistribution in Bolivia," Journal of Development Studies, Taylor & Francis Journals, vol. 52(11), pages 1647-1664, November.
    18. Wonik Kim, 2007. "Social Insurance Expansion and Political Regime Dynamics in Europe, 1880–1945," Social Science Quarterly, Southwestern Social Science Association, vol. 88(2), pages 494-514, June.
    19. Jaekwon Suh, 2012. "Corporate governance under proportional electoral systems," Public Choice, Springer, vol. 150(3), pages 671-690, March.
    20. Guinnane, Timothy W. & Marrinez Rodriguez, Susana, 2012. "For Every Law, a Loophole: Flexibility in the Menu of Spanish Business Forms, 1886-1936," Center Discussion Papers 123319, Yale University, Economic Growth Center.
    21. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.

    More about this item

    Keywords

    Labor and Human Capital; Political Economy; Public Economics;
    All these keywords.

    JEL classification:

    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:yaleeg:130879. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/egyalus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.