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Title:Incentives that saved lives: Government regulation of accident insurance associations in Germany, 1884 - 1914 PDF Logo
Authors:Guinnane, Timothy
Streb, Jochen
Issue Date:2012
Series/Report no.:Ruhr Economic Papers 364
Abstract:The German government introduced compulsory accident insurance for industrial firms in 1884. This insurance scheme was one of the main pillars of Bismarck's famous social insurance system. The accident-insurance system achieved only one of its intended goals: it successfully compensated workers and their survivors for losses due to accidents. The accident-insurance system was less successful in limiting the growth of work-related accidents, although that goal had been a reason for the system's creation. We trace the failure to stem the growth of accidents to faulty incentives built into the 1884 legislation. The law created mutual insurance groups that used an experiencerating system that stressed group rather than firm experience, leaving firms with little hope of saving on insurance contributions by improving the safety of their own plants. The government regulator increasingly stressed the imposition of safety rules that would force all firms to adopt certain safety practices. Econometric analysis shows that even the flawed tools available to the insurance groups were powerful, and that more consistent use would have reduced industrial accidents earlier and more extensively.
Subjects:social insurance
accident insurance
workman's compensation
regulation
JEL:N33
G22
H55
Persistent Identifier of the first edition:doi:10.4419/86788418
ISBN:978-3-86788-418-1
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des RWI
Ruhr Economic Papers, RWI

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