Document Type
Article
Publication Title
The RAND Journal of Economics
Publication Date
1989
ISSN
0741-6261
Page Number
499
Keywords
workers' compensation, cost control, wages, evaluation
Disciplines
Law | Workers' Compensation Law
Abstract
This article explores the effects of workers' compensation on fatality rates and wages using the 1982 Panel Study of Income Dynamics and the new occupational fatality data issued by the National Institute for Occupational Safety and Health. The fatality rate depends upon the workers' compensation benefit variables in a manner that suggests that the safety incentive effects of higher insurance premiums offset any moral hazard effects. The estimates imply that in the absence of workers' compensation, fatality rates would increase by over 20%. Premium levels substantially overstate the cost of workers' compensation, due primarily to a direct wage offset from higher benefits. An indirect wage offset resulting from the decrease in risk caused by workers' compensation augments the direct wage effects. The indirect offset is relatively small, equalling about 10% of the total.
Recommended Citation
W. Kip Viscusi,
Promoting Safety Through Workers' Compensation: The Efficacy and Net Wage Costs of Injury Insurance, 20 The RAND Journal of Economics. 499
(1989)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/101