Workersʹ compensation is one of Canadaʹs oldest social institutions. The modern era of workersʹ compensation began in the early 1900s, predating by decades other cherished institutions, like public health care, unemployment insurance, and old age pensions, that have come to define the Canadian identity. A product of the industrial revolution, workersʹ compensation sought to remedy the physical and financial suffering of workers injured in the course of their employment, to provide protection for employers from costly litigation with potentially survival-threatening outcomes, and to achieve an amelioration of societal instability that might result without a coherent approach to addressing these problems....

The nature of work is changing dramatically in Canada and throughout the world.¹ Many of our labour policies, however, were established in earlier periods, under conditions that were often vastly different than they are today. Workersʹ compensation systems in Canada, for example, were first established in 1914 in Ontario, with other provinces generally soon following in step.²

But what is the relevance of these policies to the current employment relationship? Would the same policies be instituted today, if we were to start with a clean slate? Are they evolving to meet changing circumstances, or are they mired in history, unable...

Systems of workersʹ compensation are intended to compensate victims of all workplace injuries without regard to fault. Under most workersʹ compensation legislation, an injury or disease must be caused by the employeeʹs work if it is to be compensable. However, the seemingly simple question of factual causation is becoming increasingly problematic in view of what we are learning about disease. We are beginning to understand that disease is multifactorial, emanating from a multitude of possible causes, including work. Recent evidence demonstrates that the working environment exerts a powerful influence on health and that a broad range of diseases – even...

Among the many substantial successes of modern workersʹ compensation legislation, no one counts the control of disability from low-back pain (LBP). This condition has become rampant within workersʹ compensation systems, eluding control by legislators and program managers and by their incentives aimed at claimants, employers, and healthcare providers. Low-back pain is by far the largest single cause of workersʹ compensation payments in most jurisdictions, often accounting for nearly half of all pay-outs and typically a third or more of claims. The treatment and rehabilitation costs in 1988 in the United States exceeded $17.9 billion, more than five times the concurrent...

This study examines the impact of changes in workersʹ compensation (WC) premiums, and in payroll taxes more generally, on the aggregate economies of Canada and Ontario. Such a change occurred, for example, with the 1996 Ontario Workersʹ Compensation Board premium-rate (and benefit) decreases, and could occur if there were to be significant across-the-board increases in WC premiums to offset the unfunded liabilities typical of most provincial plans, or to fund new forms of work-related injuries (see Gunderson, this volume, chapters 2 and 6). There have also been recent and relatively large changes in premium rates for Employment Insurance (EI) and...

Unfunded liabilities arise under workersʹ compensation when the expected future benefit obligations exceed the value of the assets committed to meet those liabilities. Much is at stake when substantial unfunded liabilities accumulate at workersʹ compensation boards. Addressing these liabilities requires some combination of reducing benefit payments to current and future injured workers, reducing administration costs, shifting costs to parties or other income maintenance programs outside the workersʹ compensation system, or increasing workersʹ compensation payroll taxes.

Further, unfunded liabilities can have important redistributive consequences, both intergenerationally (i.e., between existing and new firms and their employees) and across different firms and industries....

Government regulation is a fact of life in the modern labour market, and workplace health and safety is no exception. Workersʹ compensation and occupational health and safety laws and other legislation all seem to be aimed at enhancing the level of safety and at compensating victims in the workplace. Some economists have objected to the lack of faith these programs reveal in the ability of the market mechanism itself to provide safety. A number of well-known arguments have been put forward to justify government intervention in workersʹ compensation. These include moral hazard, adverse selection, the free-rider problem, and information asymmetries.²...

The administrative arrangements for workersʹ compensation (WC) today range from systems that are entirely operated by government agencies to systems in which WC insurance is entirely provided by private insurers, with many arrangements in between. Throughout the 1990s there has been much criticism of the inefficiency of public bodies and the potential benefits of allowing private firms to provide some or all of their functions. On the other hand, there is the concern that the public interest may be lost in a system driven by the profit motive. This paper uses an economic framework to consider the advantages and disadvantages...

Workersʹ compensation costs merit scrutiny because they have risen markedly over the last thirty years, and there is currently considerable variation in these costs across different jurisdictions. For example, the per-employee cost of workersʹ compensation in Ontario rose from $149.50 in 1961 to $572.56 in 1994 (both in 1994 constant dollars). Ontario workersʹ compensation expenditures were about 0.57 per cent of provincial GDP in 1960, while they amount to about 1.3 per cent of GDP today. Moreover, on a per capita basis, compensation benefit costs – the costs of workersʹ compensation excluding administrative expenses – are higher in Ontario than...

Workersʹ compensation operates in over seventy North American jurisdictions.¹ It is a particular, and sometimes peculiar, institution mandating the distinct treatment of workplace accidents for purposes of insurance and liability. The unique specifics of workersʹ compensation systems appear to be these:

Limited insurance is mandated for a large part of the workforce.

It is provided either by a state monopoly, or required of employers.

Workers exchange their rights of legal action for this insurance.

Employers are exempt from direct liability.

Decision making is a mix of ʹadministrative adjudicationʹ and standard litigation.

Insurance systems vary among jurisdictions (most U.S. states mandate...

Workersʹ compensation systems bar workers and their families from bringing an action against the workerʹs employer, the employerʹs agent, or a co-worker in respect of any personal injury, disablement, or death arising out of and in the course of employment. In exchange, it is said that workers have received a form of ʹsocial insurance.ʹ Employers are charged with funding that insurance, but are protected from liability. This, in essence, is the ʹhistoric compromiseʹ – the rock upon which workersʹ compensation is built.

This provision, in one form or another, is contained in every North American workersʹ compensation (WC) statute. In...