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ABSTRACT

Do temporary workers face more employment and earnings risk than direct-hire workers?

We link administrative workers’ compensation claims to earnings records to measure the risk posed by workplace injuries, comparing employment and earnings outcomes between temporary and direct-hire workers injured doing the same job.

We implement two complementary empirical strategies to account for underlying differences in labor market attachment.

Despite evidence that injury severity does not vary between the two sets of workers, temporary workers suffer larger reductions in employment and more severe earnings losses, persisting at least three years after injury, relative to similar direct-hire workers. The additional earnings losses suffered by temporary workers are partially offset by workers’ compensation benefits, but the income loss gap is still large even after accounting for these benefits.

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From the full-text paper:

This studied the relationship between employment arrangement (temporary worker vs direct-hire) on employment and earnings risk in the context of occupational injury and disease.

Other work has highlighted that temporary work arrangements is linked to worse occupational health and higher workers compensation claiming – but not yet studied in the context of employment and loss of earning risk.

Workers` compensation data was matched between temporary and direct-hire workers injured doing the same job.

Key findings:

• Temporary workers experience significantly larger reductions in employment and earning due to workplace injuries compared to direct-hire workers.
• In the first year of injury, temporary workers employment propensities decrease by 9.6 percentage points more than direct-hires. By the second and third years the gap gradually closes but still remains “large and statistically significant even at 12 quarters post-injury” (p2).
• Earning losses for temporary workers also remain through to the end of the third year after injury. Over 3 years of injury, temporary workers experience 15.6% larger earning reductions compared to identical direct-hires doing the same job.
• It’s noted that the greater income risk by temporary workers is partially accounted for by lower employment.
• This greater income risk faced by temporary workers partially reflects lower employment
• While the additional earning losses suffered by temporary workers partially offset by workers’ compensation benefits, “the income loss gap is still large even after accounting for these benefits” (p1). Therefore, workers’ compensation benefits may reduce but not eliminate “the incremental income loss” (p10).
• In this dataset, injury severity didn’t vary between the sets of workers.

Authors: Broten, N., Dworsky, M., & Powell, D. (2022). Journal of Public Economics, 209, 104628.

Study link: https://doi.org/10.1016/j.jpubeco.2022.104628

Link to the LinkedIn article: https://www.linkedin.com/feed/update/urn:li:ugcPost:6926672793598132224?updateEntityUrn=urn%3Ali%3Afs_updateV2%3A%28urn%3Ali%3AugcPost%3A6926672793598132224%2CFEED_DETAIL%2CEMPTY%2CDEFAULT%2Cfalse%29