The wages of irregular tasks: workers’ compensation benefits and occupational misclassification

As workers’ compensation insurance costs increase, firms have incentive to misclassify employees under ostensibly safer job classifications to lower premiums. Using Occupational Safety and Health Agency accident investigation records, we measure employee risk of fatality while performing tasks reported to investigators as outside of employee duties (“irregular tasks”). We observe standard compensating wage differentials paid for fatal accident risk during regular tasks uncorrelated with insurance costs. Both the share of fatal accidents occurring during irregular tasks and the wage differentials paid for irregular task risk, however, increase when mandated benefits increase workers’ compensation insurance costs.