Abstract
We exploit recent decades of US state-level reforms to the generosity of workers’ compensation programs to estimate the associated moral hazard, utilizing an event- study design and analyzing 9 separate reform categories. The reforms vary - some affecting benefit size, some the probability of receiving benefits; some paid in cash, some in-kind; some constituting increases, some decreases, in generosity. Across the board, we find no evidence of resulting changes in workplace injuries, and, generally, can rule out even moderate moral hazard responses for severe and less severe injuries, suggesting a key moral hazard cost of workers’ compensation benefits is negligible.
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