Work Disincentives of Workers' Compensation Permanent Partial Disability Benefits: Evidence for Canada.

This paper examines the impact of workers' compensation benefits and expected labor market earnings on the postinjury employment status of permanently injured workers. Permanent partial disability benefits in Ontario at the time the data were collected were not related to postinjury labor market earnings and can, therefore, be characterized as having a pure income effect on postinjury employment behavior. The estimation results indicate an elasticity of postinjury employment to workers' compensation permanent disability benefits of -0.15, evaluated for the mean worker. The elasticity of postinjury employment to expected postinjury labor market earnings is about 0.94 percent.