Wage and Injury Response to Shifts in Workplace Liability
This paper examines the impact of a monumental change in tort liability law, the Federal Employers' Liability Act (FELA) of 1908. This shift from common law, by changing the way injured workers were compensated and the compensating wage differentials for risk bearing, set the stage for workers' compensation and other no-fault systems. Focusing on the New Jersey railroad system, the authors examine three periods: the pre-FELA years of 1900-1908; 1909-11, when the FELA laws were the only changes in the common laws affecting some railroad workers; and 1912-16, when both FELA and workers' compensation laws affected railroad workers. They find that as liability shifted to railroad companies, accident rates fell for three occupational groups who worked outdoors, but rose for railroad "craft" employees (who worked indoors in shops). They also find that wages shifted for all four of the major occupational groups as predicted by their model.