Moral Hazard and Benefits Consumption Capital in Program Overlap: The Case of Workers' Compensation

Richard J. Butler and Harold H. Gardner

Foundations and Trends(R) in Microeconomics, 2011, vol. 5, issue 8, 477-528

Abstract: In this paper we review and extend the analysis of moral hazard response in two relatively unexamined empirical directions: (1) how insurance changes in one program affects employee participation in other programs at a point in time ( inter-program moral hazard ), and (2) how the consumption of program benefits now tends to affect employees behavior over time ( benefits consumption capital ). We develop a formal model of inter-program moral hazard based on workers' compensation with programs overlapping it (including sick leave, health insurance, and unemployment insurance), and review evidence concerning this overlap response. We also provide new evidence on benefits consumption capital concerning workers' compensation using data from one large private employer in the US.

Keywords: Moral hazard; Workers compensation; Disability insurance; Benefits; Labor Economics; Insurance; Public economics (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:now:fntmic:0700000037

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