Asymmetric Effects on Fatality Rates of Changes in Workers’ Compensation Laws

Vanderbilt Law Research Paper No. 18-16

Forthcoming, American Law and Economics Review

58 Pages Posted: 27 Aug 2018 Last revised: 25 May 2019

See all articles by Elissa Philip Gentry

Elissa Philip Gentry

Florida State University - College of Law

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: July 30, 2018

Abstract

With irreversible capital investments, changes in workers’ compensation laws should affect employer incentives asymmetrically: increases in workers’ compensation generosity should cause employers to invest more in safety, but comparable decreases might not cause them to disinvest in existing precautionary programs or equipment. Although maximum weekly benefits caps have been fairly stable, state laws have expanded or restricted workers’ compensation on multiple other dimensions. State laws may impose new requirements regarding burdens of proof, access to medical care, and the duration of benefits. This article estimates the effect of changes in these more comprehensive measures of workers’ compensation laws on workplace safety. Using confidential, restricted data from the Census of Fatal Occupational Injuries (CFOI), the article finds that increases in workers’ compensation generosity lead to a significant decrease in fatality rates, while decreases in workers’ compensation generosity do not significantly increase fatality rates.

Keywords: workers’ compensation, fatality rate, safety, incentives

JEL Classification: I18, J28, J81, J83, K32

Suggested Citation

Gentry, Elissa Philip and Viscusi, W. Kip, Asymmetric Effects on Fatality Rates of Changes in Workers’ Compensation Laws (July 30, 2018). Vanderbilt Law Research Paper No. 18-16, Forthcoming, American Law and Economics Review, Available at SSRN: https://ssrn.com/abstract=3236859 or http://dx.doi.org/10.2139/ssrn.3236859

Elissa Philip Gentry

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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