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September 1991, Vol. 114,
No. 9
Federal Employees' Compensation Act
U.S. worker
rehabilitation in international perspective
Monroe Berkowitz
Throughout the world, nations are reexamining their social welfare programs in the face of rising costs. The Dutch, for example, are concerned about an increasingly expensive welfare system that appears to encourage idleness. The cost of supporting persons on disability, combined with sickness benefits, amounted to 13.4 percent of the Netherlands' gross domestic product in 1988. That percentage was nearly double the 1970 share and significantly more than the proportions for neighboring countries, although Germany was not far behind with 11.9 percent.1 In an effort to control costs, Sweden has amended its sickness insurance program to reduce benefits paid during the first 3 days of illness.2 The Canadian province of Ontario has substantially revised its method of paying permanent disability benefits in an effort to encourage people to return to work, and State after State in the United States is amending its work injury statutes to bring costs under control.3
Our study does not present the usual examination of the trends in a nation's social welfare costs. Our concentration is on rehabilitation programs, a sometimes ill-defined set of services, the aims of which are often obscure. We do not look at all social welfare programs, or even all work injury programs, but focus instead, for purposes of international comparison, on the one program covering the U.S. Government's own employees - the Federal Employees' Compensation Act. Our rationale for this narrow focus is that examining rehabilitation programs is one good way to evaluate the incentive structure underlying the social welfare system. In singling out the U.S. Federal program, we concentrate on the one program which is run by the Federal Government itself and which, we argue, should serve as a model for the States and other countries to follow.
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Footnotes
1 International Herald Tribune, May 30, 199 1,
p. 11. The most thorough examination of the Dutch disability
system, including an analysis of the disincentives, is contained
in Leo J.M. AArts and Philip R. DeJong, "Economic Aspects of
Disability Behavior." doc. diss. (University of Rotterdam,
1990).
2 "Edges Fray on Volvo's Brave New World," The New York Times, Business Section, July 7, 199 1, p. 5. An earlier examination of disability policy in seven countries is found in Robert H. Haveman and others, Public Policy Toward Disabled Workers (Ithaca, NY, Cornell University Press, 1984).
3 Ontario's changes are reported in Rapport, a publication of the province's Workers' Compensation Board. See particularly vol. I 1, no. 1, 1989. U.S. legislation is summarized in twice-yearly publications of the U.S. Department of Labor. See, for example, State Workers' Compensation Laws (Employment Standards Administration, January 1991).
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