Have Changes in State Workers’ Compensation Programs Contributed to Rising Social Security Disability Insurance Receipt?

During the 1990s, real outlays on Social Security Disability Insurance (DI) benefits increased nearly 70 percent whereas real Workers’ Compensation (WC) cash benefit spending fell by 12 percent. There has been concern that this relationship between two of the nation’s largest social insurance programs may be due to individuals substituting towards DI as state WC policies tightened. We show this correlation between the national series does not hold within states, the level at which a causal relationship should operate. However, a causal relationship may still exist between the two programs despite a lack of correlation. We then test how regulatory changes in state WC program parameters impact WC outcomes (intended effect) and DI outcomes (unintended effect). We find no compelling evidence of WC tightening causing DI rolls to increase. We conclude it is unlikely that state WC changes were a meaningful factor in explaining the rise in DI

State Unemployment In Recessions During 1991–2009 Was Linked To Faster Growth In Medicare Spending

During the US recession of 2007–09, overall health care spending growth fell, but Medicare spending growth increased. Using state-level data from the period 1991–2009, we show that these divergent trends were also observed within states. Furthermore, increases in state unemployment rates were associated with higher Medicare spending per capita and increased hospital use by Medicare beneficiaries. For example, a one-percentage-point point rise in the unemployment rate was associated with a $40 (0.7 percent) increase in Medicare spending per capita. Our results suggest that economic downturns contribute to Medicare spending and use. One of many possible explanations may be that health care providers have greater capacity, inclination, and financial incentive to treat Medicare patients during recessions as a result of slackening demand from the non-Medicare population

Changes in Workplace Segregation in the United States between 1990 and 2000: Evidence from Matched Employer-Employee Data

We present evidence on changes in workplace segregation by education, race, ethnicity, and sex, from 1990 to 2000. The evidence indicates that racial and ethnic segregation at the workplace level remained quite pervasive in 2000. At the same time, there was fairly substantial segregation by skill, as measured by education. Putting together the 1990 and 2000 data, we find no evidence of declines in workplace segregation by race and ethnicity; indeed, black-white segregation increased. Over this decade, segregation by education also increased. In contrast, workplace segregation by sex fell over the decade, and would have fallen by more had the services industry - a heavily female industry in which sex segregation is relatively high - not experienced rapid employment growth.

Spatial Mismatch or Racial Mismatch?

We contrast the spatial mismatch hypothesis with what we term the racial mismatch hypothesis – that the problem is not a lack of jobs, per se, where blacks live, but a lack of jobs where blacks live into which blacks are hired. We first report new evidence on the spatial mismatch hypothesis, using data from Census Long-Form respondents. We construct direct measures of the presence of jobs in detailed geographic areas, and find that these job density measures are related to employment of black male residents in ways that would be predicted by the spatial mismatch hypothesis – in particular that spatial mismatch is primarily an issue for low-skilled black male workers. We then look at mismatch along not only spatial lines but racial lines as well, by estimating the effects of job density measures that are disaggregated by race. We find that it is primarily black job density that influences black male employment, whereas white job density has little if any influence on their employment. The evidence implies that space alone plays a relatively minor role in low black male employment rates.

Measuring the Importance of Labor Market Networks

We specify and implement a test for the importance of network effects in determining the establishments at which people work, using recently-constructed matched employer-employee data at the establishment level. We explicitly measure the importance of network effects for groups broken out by race, ethnicity, and various measures of skill, for networks generated by residential proximity. The evidence indicates that labor market networks play an important role in hiring, more so for minorities and the less-skilled, especially among Hispanics, and that labor market networks appear to be race-based.networks, race, ethnicity, immigrants

Estimating Hispanic-White Wage Gaps among Women: The Importance of Controlling for Cost of Living

Despite concern regarding labor market discrimination against Hispanics, previously published estimates show that Hispanic women earn higher hourly wages than white women with similar observable characteristics. This estimated wage premium is likely biased upwards because of the omission of an important control variable: cost of living. We show that Hispanic women live in locations (e.g., cities) with higher costs of living than whites. After we account for cost of living, the estimated Hispanic-white wage differential for non-immigrant women falls by approximately two-thirds. As a result, we find no statistically significant difference in wages between Hispanic and white women in the NLSY97

Does Increased Access to Health Insurance Impact Claims for Workers\u27 Compensation? Evidence from Massachusetts Health Care Reform

We study over 20 million emergency room (ER) discharges in Massachusetts and three comparison states to estimate the impact of Massachusetts health care reform on claims for Workers’ Compensation (WC). Prior evidence on the relationship between health insurance and WC claiming behavior is mixed. We find that the reform caused a significant decrease in the number of per-capita ER discharges billed to WC. This result is driven by larger decreases in WC discharges for conditions for which there is greater scope to change the payer or the location of care. Conversely, we estimate smaller impacts for weekend versus weekday admissions and for wounds compared to musculoskeletal injuries. Our findings are consistent with the reform lowering WC medical costs for employers/insurers, primarily by inducing injured workers to seek care at less costly sites. The results suggest much smaller impacts on the propensity to bill WC for a given injury

Responses to Incentives in Public Expenditure Programs

Workers' Compensation (WC) is a large social insurance program that provides medical care and cash benefits to workers injured on the job. Each WC claim involves several different parties--the injured worker, employer, doctor, insurer, and, if applicable, a third-party case manager. To date, the literature has primarily focused on worker responses to incentives, and estimates of worker responsiveness to benefit levels in the 1980s are widely cited. Little is known about how other parties respond to incentives or how worker responsiveness may have changed after the WC policy reforms of the 1990s. In response to rising employer costs, many states have passed policy reforms to reduce these costs. In this dissertation, I examine how different actors respond to changing incentives in WC, with a focus on the policy reforms of the 1990s. In Chapter 2, I complement the WC incidence literature by updating the estimated elasticity of WC receipt with respect to benefits by using data from the 1990s and reconciling the differences between previously published estimates. I find much lower levels of worker responsiveness, even after controlling for the policies that made it more difficult for workplace injuries to qualify for WC benefits and employers shifted to self-insurance. I also find that increased prevalence of self-insurance reduces the probability a worker will claim WC benefits. In Chapter 3, I focus on a reform enacted by the state of Ohio that changed incentives to third-party case managers for getting injured workers back to work. During the mid-1990s, the Ohio state insurer contracted out case management services, and the contracts incorporated a large bonus incentive payment intended to reward contractors for reducing claim duration. The bonus payment is essentially a decreasing function of average days away from work, excluding claims extending longer than 15 months. Therefore, duration is predicted to decrease for minor claims and increase for some severe claims so that the claimants remain out of work longer than 15 months and are excluded from the bonus payment calculation. I find contractor responses are consistent with the expected heterogeneous responses of a profit-maximizing firm but inconsistent with the state's intentions

The Effect of State Workers' Compensation Program Changes on the Use of Federal Social Security Disability Insurance

In addition to traditional forms of private and public medical insurance, two other large programs help pay for costs associated with ill health. In 2007, Workers Compensation (WC) insurance provided $55.4 billion in medical care and cash benefits to employees who are injured at work or contract a work-related illness, and Social Security Disability Insurance (DI) provided$99 billion to individuals who suffer from permanent disabilities and are unable to engage in substantial gainful activity. During the 1990s, real DI outlays increased nearly 70 percent, whereas real WC cash benefit spending fell by 12 percent. There has been concern that part of this relationship between two of the nation’s largest social insurance programs may be due to individuals substituting towards DI as state WC policies tightened. We test this hypothesis using a number of different WC and DI program parameters. We first show that this negative correlation between the national series does not hold over time within states, the level at which a causal relationship should operate. We then test how regulatory changes in state WC program parameters impact WC outcomes (intended effect) and DI outcomes (unintended effect). We find no compelling evidence of WC tightening causing DI rolls to increase, and conclude it is unlikely that state WC changes were a meaningful factor in explaining the rise in DI.