Abstract
The large excess fraction of difficult-to-diagnose injuries on Monday was originally thought to reflect employees’ use of workers’ compensation to cover weekend injuries. However, there has been mixed evidence found supporting this notion. This paper takes advantage of substantial reforms in California which both made filing false claims more difficult and less attractive via reduced benefits. The effects of the reforms on the frequency of Monday claims and hard-to-diagnose injuries are empirically tested using 2002-2006 workers’ compensation claims from a large temporary employment agency, an industry with pronounced asymmetric information. In the post-reform period, the fraction of claims on Monday for difficult-to-diagnose injuries drops by 7 percentage points in California – with no change for branches in other states. The results are consistent with false claims explaining a part of the Monday effect, in industries with large asymmetric information. That said, when taking into account the effects of the reforms on claim costs and overall claim rates, the excess number of Monday claims make up less than 4 percent of the cost reductions brought on by the reforms.
Published Version
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