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Incentives That (Could Have) Saved Lives: Government Regulation of Accident Insurance Associations in Germany, 1884–1914

  • Timothy W. Guinnane (a1) and Jochen Streb (a2)
Abstract

Germany introduced compulsory industrial accident insurance in 1884. The accident-insurance system compensated injured workers and survivors for losses, but initially failed to limit the growth of accident rates. We trace this failure to the 1884 law's faulty incentives and to an initial unwillingness to use the tools built into the law. The government regulator increasingly stressed rules that forced firms to adopt specific safety-enhancing innovations and practices. Econometric analysis shows that more consistent use of the rules and the limited incentives available under the law would have reduced industrial accidents earlier and more extensively.

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We acknowledge funding from the Rhein-Westfälisches Institut für Wirtschaftsforschung (RWI) and the Yale University Economic Growth Center. Cihan Artunç, Claire Brennecke, Price Fishback, Amanda Gregg, Daniel Keniston, Katharina Mühlhoff, Gabrielle Santangelo, Jakob Schneebacher and Ebonya Washington provided helpful comments and suggestions, and seminar audiences at the Berliner Forschungskolloquium zur Wirtschaftsgeschichte, Nuremberg, the 2012 World Economic History Conference in Stellenbosch, and the RWI. The editor and referees also deserve our appreciation. We thank Fabian Wahl for excellent research assistance.

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