The way the workers’ compensation system works now, employees permanently injured on the job receive a payment of $X each year whether they work or not. Suppose the government were to implement a new program in which those who did not work at all got $0.5X but those who did work got $0.5X plus workers’ compensation of 50 cents for every hour worked (of course, this subsidy would be in addition to the wages paid by their employers). What would be the change in work incentives associated with this change in the way workers’ compensation payments are calculated?

The way the workers’ compensation system works now, employees permanently injured on the job receive a payment of $X each year whether they work or not. Suppose the government were to implement a new program in which those who did not work at all got $0.5X but those who did work got $0.5X plus workers’ compensation of 50 cents for every hour worked (of course, this subsidy would be in addition to the wages paid by their employers). What would be the change in work incentives associated with this change in the way workers’ compensation payments are calculated?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 3SCQ: Imagine that the government reworks the welfare policy that was affecting Jonathan in question 1, so...

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