The American Economic Review
workers compensation, time out of work, benefits, maximum weekly benefit, incentives
Law | Workers' Compensation Law
This paper examines the effect of workers' compensation on time out of work. It introduces a "natural experiment" approach of comparing individuals injured before and after increases in the maximum weekly benefit amount. The increases examined in Kentucky and Michigan raised the benefit amount for high-earnings individuals by approximately 50 percent, while low-earnings individuals, who were unaffected by the benefit maximum, did not experience a change in their incentives. Time out of work increased for those eligible for the higher benefits and remained unchanged for those whose benefits were constant. The estimated duration elasticities are clustered around 0.3-0.4.
W. Kip Viscusi, Bruce D. Meyer, and David L. Durbin,
Workers' Compensation and Injury Duration: Evidence from a Natural Experiment, 85 The American Economic Review. 322
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/145