Workers' Compensation Insurance and Occupational Injuries

Shin, Ilsoon; Oh, Jun Byoung; Yi, Hyung Kwan

Abstract

OBJECTIVES
Although compensation for occupational injuries and diseases is guaranteed in almost all nations, countries vary greatly with respect to how they organize workers' compensation systems. In this paper, we focus on three aspects of workers' compensation insurance in Organization for Economic Cooperation and Development (OECD) countries - types of systems, employers' funding mechanisms, and coverage for injured workers - and their impacts on the actual frequencies of occupational injuries and diseases.
METHODS
We estimated a panel data fixed effect model with cross-country OECD and International Labor Organization data. We controlled for country fixed effects, relevant aggregate variables, and dummy variables representing the occupational accidents data source.
RESULTS
First, the use of a private insurance system is found to lower the occupational accidents. Second, the use of risk-based pricing for the payment of employer raises the occupational injuries and diseases. Finally, the wider the coverage of injured workers is, the less frequent the workplace accidents are.
CONCLUSION
Private insurance system, fixed flat rate employers' funding mechanism, and higher coverage of compensation scheme are significantly and positively correlated with lower level of occupational accidents compared with the public insurance system, risk-based funding system, and lower coverage of compensation scheme.