The Impact of Benefit Generosity on Workers’ Compensation Claims: Evidence and Implications

Marika Cabral and Marcus Dillender

No 26976, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Leveraging unique administrative data and a sharp increase in benefit generosity in a difference-indifferences 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.

JEL-codes: H00 I1 J01 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-ias, nep-lab and nep-pbe
Note: EH LS PE
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Citations: View citations in EconPapers (5)

Published as Marika Cabral & Marcus Dillender, 2024. "The Impact of Benefit Generosity on Workers’ Compensation Claims: Evidence and Implications," American Economic Journal: Applied Economics, vol 16(3), pages 436-481.

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Journal Article: The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications (2024)
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