NONFATAL ACCIDENT COMPENSATION AND THE COMMON-LAW AT THE TURN-OF-THE-CENTURY

We investigate the de facto operation of the employer liability system around the turn of the century with evidence on Michigan workers' non fatal accident compensation from 1896 to 1903. The results show that t he impact of the common-law defenses on accident payments was filtered through a settlement bargaining process affected by legal costs and p rivate information. The probability of receiving compensation rose whe n the accident was severe enough to raise the worker's expected court award higher than his legal costs. Workers in larger firms and with gr eater tenure were also more likely to receive compensation. The fellow servant defense may have been less effective for larger employers, wh ile the contributory negligence defense was less effective against exp erienced workers. On the other hand, employers might have been using a ccident payments as implicit fringe benefits to lower monitoring costs and to cut employee turnover.