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The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy
Alan B. Krueger and John F. Burton, Jr.
The Review of Economics and Statistics
Vol. 72, No. 2 (May, 1990), pp. 228-240
Published by: The MIT Press
Stable URL: http://www.jstor.org/stable/2109712
Page Count: 13
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New estimates of the average cost of workers' compensation insurance for a homogeneous group of employers by state are presented. These data are used to estimate cost equations for a variety of alternative specifications. The main finding is that when cost equations are estimated by ordinary least squares there is a unit elasticity of costs with respect to benefits, but instrumental variable estimates of the effect of benefits yield a greater than unit elasticity. Finally, the presence of a state insurance fund is associated with higher average costs for employers, all else equal.
The Review of Economics and Statistics © 1990 The MIT Press