Title: Self-insuring for workers' compensation benefits and occupational fatalities
Methods: We used panel data from the Bureau of Labor Statistics and National Academy of Social Insurance. We used data from all states for the period between 1998 and 2005 and a fixed effects vector decomposition technique. We hypothesized that if self-insurance affected only claims-reporting, the association between self-insurance and fatalities would not be statistically significant.
Results: We found that states with high shares of self-insured firms were associated with fewer fatal occupational injuries. After controlling for firm size, labor force composition, industrial mix, and other state-level fixed effects, a ten percentage point increase in the share of self-insured firms was associated with a decrease of the occupational fatality rate by 4.5 percent. When we measured self-insurance as a dichotomous variable (as above and below the median value), we derived similar results. States with above the average share of self-insured firms experienced nearly 4 percent less occupational fatalities compared to states with below the average share of self-insured firms.
Conclusions: The negative association between self-insuring and occupational fatality rates implied that self-insuring was likely to increases the incentive of firms to invest in safety, rather than engage in excessive claims management practices.