The relationship between regulation and prices in the workers' compensation insurance market

This study examined the effect of different state regulatory policies on the price of workers' compensation insurance. Using a time series of state cross section data for the years 1980–1987, estimates were obtained for models that differed according to how price was measured and whether the regulatory variables were treated as endogenous. When the regulatory variables were treated as exogenous, the results show that price is lower in deregulated states compared to states with prior approval regulation. Results for models with endogenous regulatory variables indicate that price tends to be lower in deregulated states, although the estimates are not statistically significant.