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Returning to Work from Injury: Longitudinal Evidence on Employment and Earnings

  • Sarah Crichton
  • Steven Stillman
  • Dean Hyslop

New Zealand has a unique accident insurance system that pays the direct costs of all injuries and compensates workers up to 80% of their earnings for any time that they are unable to work. To estimate the effect of injuries on labor market outcomes, the authors use Statistics New Zealand's Linked Employer-Employee Database (LEED) covering the period April 1999 to March 2004 using a difference-in-differences matching approach. They use two alternative matching criteria to construct control groups of non-injured workers whose pre-injury characteristics are similar to those of injured workers: the first uses only characteristics of the workers whereas the second exploits the nature of the LEED and matches workers in the same firm. Findings indicate that injuries resulting in more than three months of earnings compensation have negative effects on future labor market outcomes that do not decline with time post-injury. The results are broadly similar using both matching criteria, providing more validity to the authors' findings.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 64 (2011)
Issue (Month): 4 (July)
Pages: 765-785

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Handle: RePEc:ilr:articl:v:64:y:2011:i:4:p:765-785
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  1. Bruce D. Meyer & W. Kip Viscusi & David L. Durbin, 1990. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment," NBER Working Papers 3494, National Bureau of Economic Research, Inc.
  2. Alan Krueger & Douglas Kruse, 1995. "Labor Market Effects of Spinal Cord Injuries in the Dawn of the Computer Age," NBER Working Papers 5302, National Bureau of Economic Research, Inc.
  3. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, vol. 41(1), pages 73-99, February.
  4. Robert T. Reville & Robert F. Schoeni, 2001. "Disability from Injuries at Work: The Effects on Earnings and Employment," Working Papers 01-08, RAND Corporation Publications Department.
  5. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  6. Leslie I. Boden & Monica Galizzi, 2003. "Income Losses of Women and Men Injured at Work," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
  7. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
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