Workers' Compensation Insurance and the Duration of Workplace Injuries

This paper uses a new administrative micro-data set to examine the effect of a legislated increase in the minimum and maximum workers' compensation benefit on the duration of workplace injuries in Minnesota. As a result of legislation, workers in some earnings groups received higher benefits if they were injured after the effective date of the benefit increase, while workers in other earnings groups received the same benefit regardless of when they were injured. The analysis compares the change in mean log injury duration for workers who were affected by the benefit increase to that of workers who were not affected by the benefit increase. The findings indicate that the duration of injuries increased by 8 percent more for the group of workers that experienced a 5 percent increase in benefits than for the group of workers that had no change in their benefit. Additional findings suggest that employees of self-insured firms who are injured on the job tend to return to work faster than employees of imperfectly experience rated firms who incur similar injuries.