New Research Explores Decline in Workers’ Compensation Payouts

Marcus Dillender headshot.

The COVID-19 outbreak has brought the issue of workplace safety to the forefront as essential workers and their employers grapple with control and spread of an infectious disease.

The pandemic comes at a time when non-Hispanic people in the United States have experienced a decline in occupational injuries.  Between 1980 and 2015, the overall rate of nonfatal occupational injuries decreased by more than 60 percent.  Similarly, workers’ compensation cash benefit receipts declined by 68 percent.  During the same period of time, the population of Mexican immigrants in the United States quintupled.

Marcus Dillender, PhD, assistant professor of health policy and administration at the University of Illinois at Chicago (UIC) School of Public Health, and Melissa McInerney, PhD, associate professor of economics at Tufts University, investigated the connection between workplace safety and Mexican immigration in a new article in the Journal of Health Economics.  Their findings offer explanation for immigration effects on the decline in workers’ compensation payouts but also illustrate the unanswered questions about factors powering the decline at a time when claims may be on the rise due to workplace infections.

“The number of reported injuries has fallen dramatically over the past two decades, but it’s not clear why,” Dillender said. “It could be that things have gotten safer, but this can’t be explained by industry composition shift.”

The study examines three questions:  does occupational risk fall more for natives residing in states that experience more exposure to Mexican immigration?  Does the occupational health of non-Mexicans, as measured by receipt of workers’ compensation benefits, improve among workers more exposed to Mexican immigration?  And how much of the decline in workers’ compensation benefits overall can be explained by increased Mexican immigration?

The study found some native workers were pushed from riskier fields into safer career fields, accounting for some of the improvement in occupational risks.  Native workers also assume safer jobs within a career field as Mexican immigrants take on more dangerous tasks.

Some economic theories suggest that Mexican immigrants classified as ‘low skill’ come to the U.S., they are going to hurt people they are competing with.  Our research suggests there are some positive fringe benefits that need to be accounted for as well.

Marcus Dillender, PhD  |  Assistant Professor of Health Policy and Administration

Mexican immigration had an effect on workers’ compensation claims filed by native workers, due to their shift into safer jobs and tasks.  However, the overall decline in workers’ compensation claims paid out cannot be solely accounted by this immigration effect – the authors estimate about 11 percent of the decline is attributed to Mexican immigration.

Dillender says workplace injury reporting is a challenging mechanism for researchers.  Each state has its own workers’ compensation system, and employers can require workers to prove that an injury was suffered at the workplace, which may discourage reporting.  The citizenship status of Mexican immigrants shouldering higher risk work, and perceived risks in filing a claim with the government, may also account for some of the decline in workers’ compensation claims.

The ability of workers to access workers’ compensation benefits during the pandemic may be influenced by some of these unknown factors driving the decline in overall claim receipts.

“For immigrants or people with language or citizenship barriers, they may find it especially challenging to make a case that an infection rose from the workplace,” Dillender said.  “For certain groups of people, it’s hard to prove or they are less aggressive about trying to prove claims.”

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