Modern Us Workers’ Compensation and Work-Related Injury: No Evidence of Moral Hazard

26 Pages Posted: 7 Jan 2021 Last revised: 9 Jul 2021

See all articles by Emiliano Huet-Vaughn

Emiliano Huet-Vaughn

UCLA

Youssef Benzarti

University of California, Santa Barbara (UCSB) - Department of Economics

Date Written: December 2020

Abstract

We exploit recent decades of US state-level reforms to the generosity of workers’ compensation programs to estimate the associated moral hazard, utilizing an event- study design and analyzing 9 separate reform categories. The reforms vary - some affecting benefit size, some the probability of receiving benefits; some paid in cash, some in-kind; some constituting increases, some decreases, in generosity. Across the board, we find no evidence of resulting changes in workplace injuries, and, generally, can rule out even moderate moral hazard responses for severe and less severe injuries, suggesting a key moral hazard cost of workers’ compensation benefits is negligible.

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Suggested Citation

Huet-Vaughn, Emiliano and Benzarti, Youssef, Modern Us Workers’ Compensation and Work-Related Injury: No Evidence of Moral Hazard (December 2020). NBER Working Paper No. w28187, Available at SSRN: https://ssrn.com/abstract=3761565

Emiliano Huet-Vaughn (Contact Author)

UCLA ( email )

4284 School of Public Affairs
Los Angeles, CA 90095
United States

Youssef Benzarti

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

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