American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications
American Economic Journal: Applied Economics
vol. 16,
no. 3, July 2024
(pp. 436–81)
Abstract
Leveraging unique administrative data and a sharp increase in benefit generosity in a difference-in-differences research design, we estimate the impact of workers' compensation wage replacement benefits on individual behavior and program costs. We find that increased benefit generosity leads to longer income benefit durations and increased medical spending. Responses along these two margins are equally important drivers of increased program costs, collectively increasing program costs 1.4 times the mechanical increase in costs. Using these estimates and an estimate of the consumption drop among injured workers, our welfare calibrations suggest that a marginal increase in benefit generosity would not improve welfare.Citation
Cabral, Marika, and Marcus Dillender. 2024. "The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications." American Economic Journal: Applied Economics, 16 (3): 436–81. DOI: 10.1257/app.20220032Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- I11 Analysis of Health Care Markets
- J28 Safety; Job Satisfaction; Related Public Policy
- J31 Wage Level and Structure; Wage Differentials
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