Department of Economics
University of Texas at Austin
BRB 1.116, C3100
Austin, TX 78712
NBER Working Papers and Publications
|July 2019||What is the Rationale for an Insurance Coverage Mandate? Evidence from Workers’ Compensation Insurance|
with Marika Cabral, Michael Dworsky: w26103
There is ongoing policy debate about whether government insurance coverage mandates are necessary to effectively address market failures in private insurance markets. This paper analyzes the demand for insurance in the absence of a coverage mandate and the potential market failure rationale for coverage mandates in the context of workers' compensation insurance. Workers' compensation is a state-regulated insurance program that provides employees with income and medical benefits in the event of work-related injuries or illnesses. Nearly all states have mandated workers' compensation insurance coverage; the sole exception is Texas. Using administrative data from the unique voluntary Texas workers' compensation insurance system, we estimate the demand for workers' compensation insurance lever...