BENEFIT INCREASES IN WORKERS COMPENSATION

It is increasingly apparent that changing levels of benefits in social insurance and welfare programs have profound impacts on the behavior of not only potential recipients but also on those who pay for such programs. Benefit increases in Social Security, unemployment insurance, AFDC, rehabilitation programs change not only labor supply, but can also affect savings, the structure of wages and fringe benefits, and risk-taking behavior both with respect to unemployment and occupational injuries. Recent empirical research into the Workers Compensation system indicates patterns of recipient responses similar to those identified in the much larger literature on Social Security and unemployment insurance: claims frequency and duration varies directly with Workers Compensation benefits and wages decrease to compensate for higher benefits. Yet despite the pivotal role that benefits play in all of these programs, virtually nothing is known about the political economy of benefit changes. In this paper we analyze the empirical determinants of changes in benefit levels in Workers Compensation. -from Authors