What Determines Employer Accommodation of Injured Workers? The Influence of Workers’ Compensation Costs,State Policies,and Case Characteristics

Abstract

Despite a recent dramatic increase in the rate of employer accommodation of injured workers, the extant literature provides little evidence on the determinants of accommodation or the reasons for this upward trend. In this study, the authors take a comprehensive approach to estimating the determinants of workplace accommodation, assessing the influence of employer workers’ compensation (WC) costs; WC market features and state WC laws; and characteristics of firms, injured workers, and their injuries. Using state-level data from the BLS, they find that employer WC costs, WC market features, and state return-to-work (RTW) policies all have an impact on accommodation, but the effects are small and explain only one-fifth of the increase in restricted work. With data on injured workers from the NLSY79 and HRS, the authors study case-specific determinants of accommodation. Results suggest that employer and injury characteristics matter most, and these results are consistent with accommodation occurring mostly at large, experience-rated employers.