INCENTIVE EFFECTS OF WORKERS COMPENSATION INSURANCE

This paper uses micro-level data from the Current Population Survey to estimate the determinants of participation in state workers' compensation programs in the United States. The principal finding is that higher workers' compensation benefits are associated with greater participation in the workers' compensation program, after accounting for a variety of covariates. In addition, the waiting period is found to have a substantial negative effect on program participation. Finally, time-series estimates based on the cross-sectional model show that the growth in workers' compensation claims in the 1970s corresponds reasonably well with the growth in real benefits in this time period. © 1990.