Workers Compensation Policy

The quality of life experienced by people with MCS is shaped, to a great extent, by the level of awareness of environmental health issues where they live and work. Some are recipients of workplace accommodations in accordance with the Americans with Disabilities Act others are harassed and ostracized at work, or fired from their jobs. Some disabled by chemical exposures in the workplace receive workers compensation the majority of chemical-illness claims are denied. Some cities, schools and other institutions have adopted fragrance-free policies and Integrated Pest Management (IPM) programs to reduce chemical barriers and dangers in public places others still resist despite all the prevalence studies and research indicating that MCS is a serious threat to public health. 

Gruber, Johnathan, and Alan Krueger. 1991. The Incidence of Mandated Employer-Provided Insurance Lessons From Workers Compensation Insurance. In Tax Policy and the Economy 5. Edited by James Poterba. Cambridge Massachusetts Institute of Technology Press. 

Carbon monoxide at high levels can cause myocardial infarction in otherwise healthy individuals and, at lower levels, can aggravate ischemia in the face of established atherosclerotic heart disease (ASHD). Chronic exposure to carbon monoxide may also be associated with ASHD. Many jurisdictions automatically grant workers compensation to firemen or policemen with ASHD, regarding it as a stress-related occupational disease. This is related to social policy rather than established epidemiologic risk. 

It would be useful to check these impressions against the official statistics on occupational risk collected by the Bureau of Labor Statistics (BLS), but these are notoriously unreliable. Indeed, the National Research Council, an offshoot of the National Academy of Sciences that reports on public policy issues, found the BLS data inadequate for monitoring the effectiveness of safety programs (Saddler, 1987). There are several problems. First, the data are collected as part of the Occupational Safety and Health Act (OSHA) reporting system, which subjects them to distorting incentive effects. Firms are required to maintain logs of fatal and nonfatal accidents, but they have an incentive to underreport this information since it could be used as evidence to support workers compensation or tort claims by workers, and because... 

The description at the end of Chapter 1 makes it clear that not all human resource management (HRM) changes necessarily improve safety. HRM policies implemented to eliminate all cost sharing associated with injuries, while they do remove income risk for woikers, also lessen their safety incentive. An example would be policies that ensured that employees on workers compensation elaims made as much money as they would at work. Profit sharing, on the other hand, might increase employees safety awareness. In this ehapter, we review prior analyses of how various HRM practices affeet safety to get a better idea of whieh practices improve safety and which do not. 

In other words, in competitive markets, where firms are looking for skilled labor and seeking optimal HRM policies (policies that minimize the sum of the accident costs, as discussed in Chapter 1), the workers compensation administrator s role should be minimal. Administrators... 

As with many of the activities within the safety function, safety professionals should be aware that Title VII does not function in an isolated manner. Often, issues or circumstances of potential discrimination may be intertwined with workers compensation claims, training functions, or other routine safety activity. It is imperative that a safety professional be able to identify the potential issue or circumstance in which protections against discrimination may be present and take the appropriate actions as proscribed by company policy or procedures to prevent or address the potential discriminatory action. 

We have emphasized that workers compensation insurance (WC) is the most important public policy influencing workplace safety in the United States. We now examine the economic and policy implications of asymmetric information on the part of workers and firms concerning injury severity and compensability under WC. Concern over the difficulty in determining the information content of workers compensation claims is underscored in a recent Economic Report of the President (1987, p. 197), which noted that... 

A focal point of our book is that numerical simulation of structural models is a useful complement to econometric research. One of the ways we demonstrate the complementarity between estimation and simulation is to use our simulation model to locate where more precise parameter estimates would change the economic and policy implications versus where parameter values matter little to outcomes of interest. We now describe, as in previous chapters, results of how some key structural parameters and starting values affect the economic implications of workers compensation insurance for job safety, claims filed, and claims paid. 

Workers compensation insurance is the most important public policy influence on workplace safety in the United States. Here we have examined more deeply the quantitative properties of the WC program, specifically the imperfect verification of injuries as work related or their severity. Our numerical simulations provide quantitative insights into an issue currently at the forefront of theoretical microeconomics — information asymmetries (Hirschleifer and Riley, 1992). The practical implication of information asymmetry in the case of workers compensation insurance is that increases in benefit generosity can paint a puzzling picture of labor market outcomes because the number of workers applying for and receiving WC benefits can rise while actual workplace injuries fall. Data on injuries reported under workers compensation can produce a wrong conclusion of the effects of WC on workplace safety. 

Our simulations and other researchers econometric results underscore workers compensation insurance provides economic incentives for employers to make their workplaces safer. The positive influence of WC on safety appears when actual injuries are measured instead of injury rates that reflect reporting bias. Public policy must cope with the fact that higher WC benefits lead some workers to file spurious claims for compensation and to spend more time away from work recovering from compensable injuries. 

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