TY  - JOUR
AU  - Card,David
AU  - McCall,Brian P.
TI  - When to Start a Fight and When to Fight Back: Liability Disputes in the Workers' Compensation System
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11918
PY  - 2006
Y2  - January 2006
UR  - http://www.nber.org/papers/w11918
L1  - http://www.nber.org/papers/w11918.pdf
N1  - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA  94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu

Brian McCall
2108B School of Education
University of Michigan
610 East University Ave.
Ann Arbor MI 48109-1259
Tel: (734) 647-8366
E-Mail: bpmccall@umich.edu
AB  - Despite the adoption of no-fault Workers' Compensation legislation in most states, there is substantial litigation over the issue of employer liability for injury claims. We develop a sequential asymmetric information model of liability disputes and estimate the model using data on injury claims from the state of Minnesota. The key insight of our model is that when workers differ in their costs of pursuing a injury claim, employers have an incentive to deny liability and force those with higher costs to abandon their claim. Likewise, workers who expect a bigger return from pursuing their claim are more likely to fight back when liability is denied. Estimates of the structural model confirm that the decision rules of both parties depend on the expected costs and benefits of continuing the dispute. The model provides a parsimonious but relatively successful explanation for the distribution of liability disputes across different workers and types of injuries.
ER  -