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IFS-STICERD Public Economics Seminar

Firm Accommodation and the Design of Social Insurance

Corina Mommaerts (University of Wisconsin–Madison)

Wednesday 31 May 2023 12:30 - 13:45

Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

About this event

This paper studies the labor market impacts of firm accommodation decisions in response to worker productivity shocks and assesses the role of firms in the design of social insurance programs. Our empirical context is workplace disability, where we leverage detailed administrative data about workplace disability, firm accommodation, and wages from a workers’ compensation program in Oregon that provides wage subsidies to firms for workplace accommodation. Exploiting a policy change to the wage subsidy, we find that a 5 percentage point decrease in the wage subsidy rate led to a significant decrease in accommodation and corresponding negative effects on employment and earnings. To interpret these findings, we develop a frictional labor market model with workplace disability and firm accommodation in which accommodation affects the future productivity of injured workers. Worker turnover and imperfect experience rating can lead to under-accommodation and inefficient labor market outcomes after workplace disability. We identify and structurally estimate our model by exploiting our estimates based on wage subsidy changes. Counterfactual analyses show that a wage subsidy of 40% maximizes overall worker welfare.

This seminar series is jointly organized by the IFS and STICERD.

IFS-STICERD Public Economics seminars are held on Wednesdays in term time at 12.30-13.45 IN PERSON at the IFS.

Seminar organisers: Stuart Adam (IFS), Monica Costa Dias (IFS), Xavier Jaravel (LSE), Camille Landais (LSE), Attila Lindner (UCL), Joana Naritomi (LSE), and Johannes Spinnewijn (LSE).

For further information please contact Peter Levell: .

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