Occupational injury and illness meet the labor market: lessons from labor economics about lost earnings

Abstract

Recent labor economics studies in the United States and Canada have demonstrated that occupational injuries and illnesses often lead to substantial lost earnings for workers and their families. Other studies have shown substantial long-term lost earnings attributable to large-scale layoffs, where no health impairment has taken place. This article uses evidence from these and other studies of apparently different situations to draw inferences about how managers' actions and public policy choices can affect the costs of occupational injuries and illnesses. Although primary prevention remains the policy of choice, reduction in the impact of workplace injuries and illnesses can decrease the costs of these events and can provide substantial benefits. This article proposes two hypotheses and discusses the evidence for each: (a) Loss of the job held at the onset of illness or injury increases time off work and exacerbates workers' lost earnings. (b) Workers' losses may be substantially reduced by policies that encourage employers to rehire people recovering from or disabled by workplace injuries and illnesses.