The upward trend in workers' compensation indemnity claims has been largely the result of two forces: changes in the program itself, particularly in the level of benefits and in the decline in the waiting period, and changes in the demography of the workforce, particularly the level of risky employment and the number of older workers. Consistent with previous research in workers' compensation, my research shows sizable increases in both the frequency and severity of insurance claims as the wage replacement rate increased and as the waiting period decreased. Comparisons with Occupational Safety and Health Administration data indicate that the increased benefit utilization comes from an increased propensity to report claims rather than a change in workers' or firms' risky behavior. This suggests that, even though current workplaces may be safer, the number of workers reporting an injury may increase as benefits are liberalized or as waiting periods continue to change. Why Costs Rose: Frequency and Severity Components Estimates indicate that workers tend to increase the frequency and severity of workers' compensation claims as benefits increase and as the waiting period for receiving benefits falls. But this can be either because they are willing to undergo more risk ex ante which results in more injuries ex post-behavior that I call risk bearing moral hazard-or because higher benefits induce them to report more injuries and increase the duration of their claims-behavior that I call claims reporting moral hazard. This article adds to recent literature that aims to sort out the significance of these two types of behavior in explaining cost trends in compensation costs (Butler and Worrall, 1991b, for example) by looking at differential incentive responses in two different data sets.