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Economics Research International
Volume 2012 (2012), Article ID 652056, 21 pages
http://dx.doi.org/10.1155/2012/652056
Research Article

Social Insurance and Truncated Benefits: Measuring the Impacts of Workers' Compensation

Department of Economics & Business, Virginia Military Institute, 333 Scott Shipp Hall, Lexington, VA 24450, USA

Received 21 March 2012; Accepted 25 May 2012

Academic Editor: Almas Heshmati

Copyright © 2012 Samuel K. Allen. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study addresses the indirect impacts of state-mandated workers' compensation benefits on workers' wages. The benefit structure of workers' compensation causes a fundamental estimation problem. I develop a new strategy to limit the biases inherent in earlier models. I utilize individual-level census data (between 1940 and 1990) to exploit benefit variation that occurs both across states and within the fifty states over time. The results suggest that wage offsets are not constant across time and may be larger for workers at lower-wage levels.