A Neoclassical and a Radical Explanation of the Interstate Variation in Worker's Compensation Benefits in the United States

Jack Frisch
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Jack Frisch: NSW Planning and Environment Commission

No 512, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: The paper poses two quite different models to explain the difference in the extent of compensation for work-related injuries across the United States. The first is a "neoclassical" model which posits a demand for coverage based on income, prices, the availability of substitutes and other demand variables, and has vote-maximizing legislators "supplying" coverage to satisfy the demand of the median voter. The alternative is a "conflict" model in the Marxian tradition, with testable hypotheses drawn from both recent radical literature which emphasizes class segmentation and racism, as well as hypotheses about the effect of unionization. Ordinary least-squares estimates are generated for each model on the same set of dependent variables. The results are satisfactory and coefficients conform to expectations for each model, suggesting that the world is as one looks at it. A closer examination suggests a marginally superior empirical performance and an unequivocally superior theoretical performance by the neoclassical model - thus challenging the author's basic subjective radical sympathies.

JEL-codes: L89 (search for similar items in EconPapers)
Date: 1980-03
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:132

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