Download This PaperThe Impact of Benefit Generosity on Workers’ Compensation Claims: Evidence and Implications
81 Pages Posted: 13 Apr 2020 Last revised: 18 Mar 2026
Date Written: April 2020
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.
Suggested Citation: Suggested Citation