Is workers' compensation a substitute for unemployment insurance?

This paper examines how the Workers' Compensation (WC) and Unemployment Ins urance (UI) programs interact to influence the duration of claims due to wo rkplace accidents. We use longitudinal WC administrative micro-data on more than 30,000 workers in the Canadian construction industry for the period 1 976-1986. For the estimations, we use the Meyer (1990) semi-parametric prop ortional hazard model. Our results show, in particular, that a reduction in the UI replacement ratio is associated with an increase in the duration of claims due to severe accidents that are difficult to diagnose. Moreover, t he duration of spells on WC is much higher when an accident occurs in Decem ber, a month which corresponds to the beginning of the lay-off season in th e construction sector. This result is consistent with the fact that WC bene fits are more generous than UI benefits in Canada.