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Disability from Injuries at Work: The Effects on Earnings and Employment

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  • Robert T. Reville
  • Robert F. Schoeni

Abstract

This study estimates the earnings losses associated with workplace injuries that lead to permanent partial disability. Using unique administrative data from California, injured workers are matched to their co-workers with similar pre-injury earnings. Earnings loss is estimated as the difference in earnings between these two groups following injury. It is found that earnings losses are large. Moreover, despite the fact that earnings rebound after an initial steep fall, four to five years after injury earnings losses are 25 percent. A large share of the earnings loss is due to lower employment after injury among injured workers. Earnings losses are smaller for workers: with less severe injuries, lower pre-injury earnings, employed in larger firms, and injured when the labor market is robust. Workers suffering from spinal cord injuries and psychiatric disorders experienced particularly large losses. Workers employed in manufacturing industries experience the largest losses; however, the disparities across industries are an artifact of differential severity of injuries and pre-injury earnings. There is some evidence that suggests that benefits are not equitable: some workers receiving different disability ratings and benefits experience the same loss in earnings. Finally, there is no evidence that the 21 percent increase in temporary total disability benefits in California in 1994 affected employment or earnings losses in the long run.

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File URL: http://www.rand.org/content/dam/rand/pubs/drafts/2005/DRU2554.pdf
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Bibliographic Info

Paper provided by RAND Corporation Publications Department in its series Working Papers with number 01-08.

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Length: 44 pages
Date of creation: May 2001
Date of revision:
Handle: RePEc:ran:wpaper:01-08

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Cited by:
  1. Sarah Crichton & Steven Stillman & Dean Hyslop, 2011. "Returning to Work from Injury: Longitudinal Evidence on Employment and Earnings," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(4), pages 765-785, July.
  2. Pouliakas, Konstantinos & Theodossiou, Ioannis, 2010. "An Inquiry into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety at Work," IZA Discussion Papers 4734, Institute for the Study of Labor (IZA).
  3. Woock, Christopher, 2007. "The earnings losses of injured men: Accounting for injuries outside the Workers' Compensation system," MPRA Paper 14688, University Library of Munich, Germany.
  4. Halla, Martin & Zweimüller, Martina, 2013. "The effect of health on earnings: Quasi-experimental evidence from commuting accidents," Labour Economics, Elsevier, vol. 24(C), pages 23-38.
  5. Anne Moller Dano, 2005. "Road injuries and long-run effects on income and employment," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 955-970.
  6. Bronchetti, Erin Todd, 2012. "Workers' compensation and consumption smoothing," Journal of Public Economics, Elsevier, vol. 96(5), pages 495-508.
  7. McAllister, Susan & Derrett, Sarah & Audas, Rick & Herbison, Peter & Paul, Charlotte, 2013. "Do different types of financial support after illness or injury affect socio-economic outcomes? A natural experiment in New Zealand," Social Science & Medicine, Elsevier, vol. 85(C), pages 93-102.
  8. Martin Halla & Martina Zweimüller, 2011. "The Effect of Health on Income: Quasi-Experimental Evidence from Commuting Accidents," Economics working papers 2011-04, Department of Economics, Johannes Kepler University Linz, Austria, revised Feb 2012.

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