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IZA Discussion Paper No. 10621
March 2017
Benefit Generosity and Injury Duration: Quasi-Experimental Evidence from Regression Kinks

In this paper, we investigate the effect of benefit generosity on claim duration and temporary benefits paid among temporary disability claims for workers' compensation. While previous studies have focused on natural experiments created by one-time large changes in minimum or maximum weekly benefits, we exploit variation around a kink in benefit generosity inherent in all workers' compensation systems in the United States. Using administrative data on the universe of injured workers in Oregon, we also find that more-generous benefits leads to longer injuries, but with implied elasticities that are smaller than the average elasticity from previous difference-in-difference studies. Our preferred estimates suggest that a 10-percent increase in benefit generosity leads to a 2- to 4-percent increase in injury duration. We derive similar duration-benefit elasticities when studying changes in benefits paid at the kink. We also introduce the first evidence that more-generous benefits encourage subsequent claim filing.

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Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
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Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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