A Prelude to the Welfare State: The Origins of Workers' by Price V. Fishback, Shawn Everett Kantor

By Price V. Fishback, Shawn Everett Kantor

Staff' reimbursement was once arguably the 1st frequent social coverage software within the usa and the main winning type of exertions laws to emerge from the early revolutionary stream. followed in so much states among 1910 and 1920, employees' reimbursement legislation were paving visible because the method for social safety, Medicare, unemployment assurance, and finally the vast community of social welfare courses now we have today.In this hugely unique and persuasive paintings, rate V. Fishback and Shawn Everett Kantor problem frequent historic perceptions, arguing that, instead of being an early revolutionary victory, staff' repayment succeeded simply because all correct parties—labor and administration, insurance firms, legal professionals, and legislators—benefited from the laws. Thorough, rigorous, and convincing, A Prelude to the Welfare nation: The Origins of employees' reimbursement is a big reappraisal of the motives and outcomes of a move that eventually remodeled the character of social assurance and the yank place of work.

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Additional info for A Prelude to the Welfare State: The Origins of Workers' Compensation (National Bureau of Economic Research Series on Long-Term Factors in Economic Dev)

Sample text

They considered the common law employer liability structure to be ill-designed to meet these goals. Since negligence liability based injury payments on fault, reformers argued that too many workers and their families were left uncompensated. Further, they felt that the de facto operation of negligence liability often meant that workers who legally should have received benefits often received nothing or lower payments than that to which they were entitled in theory. Thus, employers had limited incentives to prevent accidents.

The assumption of risk defense was justified on the grounds that if workers knew the dangers of their work in advance, then they could negotiate higher wages for accepting the risk (Adam Smith's compensating wage differential) and use this "risk premium" to buy workplace accident insurance. Finally, the fellow servant defense allegedly promoted efficient accident prevention because it gave workers an incentive to report the hazardous actions of coworkers to the employer so that the dangerous behavior could be corrected (Landes and Posner 1987, 309-1 1).

If insurers have only limited information about the risks faced by individual workers, they will have problems with adverse selection if they just set a rate and offer full coverage. Typically, they will sustain losses if they follow this pricing strategy because only the workers 18 Chapter 1 faced with higher risks will purchase insurance. To resolve this problem the companies will limit how much they sell to workers. Further, the insurers will try to limit payouts to prevent against problems with moral hazard.

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