How Does Employment Risk Following Workplace Injury Vary Over the Income Distribution? Evidence from Matched Workers' Compensation and Earnings Data from California

Workplace injuries are an important source of income risk for households and have been shown to increase the risk of SSDI entry. Lower socioeconomic status is associated both with SSDI receipt and slower return to work following workplace injury, but there is little evidence directly linking the socioeconomic gradient in post-injury return to work with longer-term employment outcomes. We use data on workers' compensation claims from California linked to earnings records to quantify the employment effects associated with workplace injuries three years after the injury. We compare employment rates of injured workers to matched control workers at the same firm who do not experience a workplace injury. This paper focuses on differences in these post-injury employment effects across the wage distribution. We find some evidence of additional risk of poor long-term labor outcomes for the lower part of the wage distribution. When we do not account for differences in firm, worker, and injury characteristics, we find that high wage workers have better post-injury labor outcomes, but there is less evidence that the bottom of the distribution suffers especially poor outcomes. Accounting for differences across injured workers, there is much stronger evidence of a wage gradient, implying that differences across workers obscures these relative employment outcomes. These results suggest that low-wage injured workers are likely at elevated risk of labor force exit and SSDI entry, and as such might be a promising target for future research and targeted rehabilitation efforts.