Work disincentives of workers' compensation permanent partial disability benefits: Evidence for Canada

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