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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 for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1857
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    References listed on IDEAS

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    1. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    2. Meyer, Bruce D & Viscusi, W Kip & Durbin, David L, 1995. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment," American Economic Review, American Economic Association, vol. 85(3), pages 322-340, June.
    3. Krueger, Alan B., 1990. "Incentive effects of workers' compensation insurance," Journal of Public Economics, Elsevier, vol. 41(1), pages 73-99, February.
    4. 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.
    5. Robert T. Reville & Robert F. Schoeni, 2001. "Disability from Injuries at Work: The Effects on Earnings and Employment," Working Papers 01-08, RAND Corporation.
    6. 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.
    7. 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).
    8. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
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    Cited by:

    1. 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.
    2. 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.
    3. Adrian Chadi & Laszlo Goerke, 2015. "Missing at Work – Sickness-related Absence and Subsequent Job Mobility," IAAEU Discussion Papers 201504, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    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. 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.
    6. 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.
    7. Emmanuel Duguet & Christine le Clainche, 2012. "Chronic Illnesses and Injuries: An Evaluation of their Impact on Occupation and Revenues," Working Papers 12-02, LAMETA, Universtiy of Montpellier, revised Jan 2012.
    8. 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).

    More about this item

    Keywords

    injury; matching; New Zealand; disability; program evaluation;

    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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