Firm Accommodation After Disability: Labor Market Impacts and Implications for Social Insurance / Naoki Aizawa, Corina Mommaerts, Stephanie L. Rennane.

Format:

Book

Author/Creator:

Aizawa, Naoki.

Contributor:

National Bureau of Economic Research.

Mommaerts, Corina.

Rennane, Stephanie L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31978.

NBER working paper series no. w31978

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

This paper studies the labor market impacts of firm accommodation decisions and assesses implications for the design of social insurance for workplace disability. We leverage a unique workers' compensation (WC) program in Oregon that provides wage subsidies to firms for accommodating injured workers. Exploiting rich administrative data and a policy change to the wage subsidy, we show that accommodation rates respond to the subsidy rate and that receipt of accommodation leads to a significant increase in employment and earnings a year later. To explore welfare implications, we develop and estimate a frictional labor market model of accommodation as a form of human capital investment. Worker turnover and imperfect experience rating in WC lead to under-accommodation and inefficient labor market outcomes after workplace disability. Counterfactual simulations show that subsidizing accommodation not only improves long-run labor market outcomes of workers experiencing work-related disability but also leads to welfare gains for most workers.

Notes:

Print version record

December 2023.