Severe work disabilities and long-lasting losses

Abstract

We study the impacts over time of occupational injuries on workers’ earnings. Italian blue-collar workers with “severe” temporary disabilities suffer larger losses than permanently but mildly partially disabled workers. This is not only because of lower post injury wages, but mostly because of compromised future employability. They also suffer a decline in quality of life as measured by a relative increase in the use of sick leave. Effects are more pronounced for women. The workers’ compensation system does not adequately compensate them, even in a generous public system that guarantees return to work, as temporarily disabled workers are not entitled to any additional compensation after returning to work. On the other hand, estimated losses are smaller compared to those emerging in less regulated markets like the US.