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

Author

Listed:
  • Crichton, Sarah

    (Statistics New Zealand)

  • Stillman, Steven

    (Free University of Bozen/Bolzano)

  • Hyslop, Dean

    (Motu Economic and Public Policy Research Trust)

Abstract

New Zealand has a unique accident insurance system that pays the direct costs of all accidental injuries and compensates workers 80% of their earnings for any time post-injury that they are unable to work. Statistics New Zealand's Linked Employer-Employee Database contains monthly information on earnings, welfare benefit income, and accident-related earnings compensation for all New Zealanders from 1999-2004. Using time receiving earnings compensation as a proxy for injury severity, we estimate the effect of injuries on employment and benefit rates, and total income by comparing the observed changes in outcomes for the injured population with matched 'control' groups of non-injured individuals. We find that injuries that result in more than 3 months of earnings compensation have negative effects on future labour market outcomes. For example, individuals who receive 4 months compensation have 2% lower employment rates and 6-8% lower monthly incomes 18 months after compensation ends compared with 18 months prior to being injured than comparable non-injured workers. The magnitude of these effects increase with injury duration; individuals who receive 10-12 months of compensation have 10-15% lower employment rates, 3-4% higher benefit receipt rates, and 14-22% lower monthly incomes. We also find evidence that longer-duration injuries have larger impacts on women, older workers, and workers with lower earnings or with less stable employment histories.

Suggested Citation

  • Crichton, Sarah & Stillman, Steven & Hyslop, Dean, 2005. "Returning to Work from Injury: Longitudinal Evidence on Employment and Earnings," IZA Discussion Papers 1857, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1857
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    References listed on IDEAS

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    Cited by:

    1. Anikó Bíró & Márta Bisztray & João G. da Fonseca & Tímea Laura Molnár, 2023. "Accident-induced absence from work and wage ladders," IFS Working Papers W23/30, Institute for Fiscal Studies.
    2. 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.
    3. Francisco Parro & R. Vincent Pohl, 2021. "The effect of accidents on labor market outcomes: Evidence from Chile," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1015-1032, May.
    4. Emmanuel Duguet & Christine Le Clainche, 2014. "The Effect of Non-Work Related Health Events on Career Outcomes: An Evaluation in the French Labor Market," Revue d'économie politique, Dalloz, vol. 124(3), pages 437-465.
    5. Yulia Chikish & Brad R. Humphreys, "undated". "The Impact of Health Shocks on Worker Performance: Evidence from Professional Sports," Working Papers 24-06, Department of Economics, West Virginia University.
    6. Mario Lackner & Hendrik Sonnabend, 2023. "Presenteeism when employers are under pressure: evidence from a high‐stakes environment," Economica, London School of Economics and Political Science, vol. 90(358), pages 477-507, April.
    7. Emmanuel Duguet & Christine Le Clainche, 2020. "The Socioeconomic and Gender Impacts of Health Events on Employment Transitions in France: A Panel Data Study," Journal of Human Capital, University of Chicago Press, vol. 14(3), pages 449-483.
    8. Gabriele Mazzolini, 2020. "The Economic Consequences of Accidents at Work," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(5), pages 1068-1093, October.
    9. Chadi, Adrian & Goerke, Laszlo, 2015. "Missing at Work - Sickness-related Absence and Subsequent Job Mobility," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112862, Verein für Socialpolitik / German Economic Association.
    10. Mohamed Ali Ben Halima & Camille Regaert, 2015. "Quel est l’impact de la survenue d’un accident du travail sur la santé et le parcours professionnel ?," Working Papers DT68, IRDES institut for research and information in health economics, revised Jul 2015.
    11. Konstantinos, Pouliakas & Ioannis, Theodossiou, 2010. "An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work," MPRA Paper 20336, University Library of Munich, Germany.
    12. Emmanuel Duguet & Christine Le Clainche, 2012. "Chronic Illnesses and Injuries: An Evaluation of their Impact on Occupation and Revenues," Erudite Working Paper 2012-03, Erudite.
    13. Gabriele Mazzolini, 2014. "The economic consequences of accidents at work," DISCE - Working Papers del Dipartimento di Economia e Finanza def015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    14. Schurer, Stefanie, 2017. "Bouncing back from health shocks: Locus of control and labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 1-20.
    15. Keith Bender & Colin Green & John Heywood, 2012. "Piece rates and workplace injury: Does survey evidence support Adam Smith?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 569-590, January.
    16. Emmanuel Duguet & Christine Le Clainche, 2014. "Chronic Illnesses and Injuries: An Evaluation of their Impact on Occupation and Revenues / Maladies chroniques et accidents : une évaluation de leur impact sur le parcours professionnel et les revenus," Working Papers halshs-00966970, HAL.
    17. 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.
    18. Chadi, Adrian & Goerke, Laszlo, 2018. "Missing at work – Sickness-related absence and subsequent career events," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 153-176.
    19. repec:ctc:serie1:def15 is not listed on IDEAS
    20. Galizzi, Monica & Leombruni, Roberto & Pacelli, Lia, 2023. "Severe work disabilities and long-lasting losses," Labour Economics, Elsevier, vol. 85(C).
    21. Collischon, Matthias & Hiesinger, Karolin & Pohlan, Laura, 2023. "Disability and Labor Market Performance," IZA Discussion Papers 16100, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    injury; matching; New Zealand; disability; program evaluation;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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