Unnatural experiments? Estimating the incidence of endogenous policies

There are numerous empirical studies that exploit variation in policies ove r space and time in the U.S. federal system. If state policy making is purp oseful action, responsive to economic and political conditions within the s tate, then it is necessary to identify and control for the forces that lead to these policy changes. This paper investigates the implications of polic y endogeneity for a specific policy context - workers' compensation benefit s. We contrast different methods of estimation and their pros and cons in t his context.