The Relationship Between Workers' Compensation and Disability Insurance

Abstract

Social Security Disability Insurance (SSDI), a federal program, provides benefits to persons totally disabled from any cause. State workers’ compensation (WC) programs provide benefits to persons partially or totally disabled by work-related injuries. The determinants of SSDI applications in a state include the unemployment rate and the disability prevalence rate. SSDI applications increased between 1985 and 1999 as the statutory level of WC cash benefits declined and as the eligibility rules for WC tightened. These results suggest the costs of workplace injuries are being shifted, thus aggravating the financial problems of the federal SSDI program and muting WC safety incentives.