Restricted Work, Workers’ Compensation, and Days Away from Work

We use an establishment-based survey of occupational injuries to analyze employers’ use of restricted work and its effect on days away from work. Because restricted work provisions vary with the duration and severity of injury, we use its predicted probability in our analysis of days away from work. Higher benefits and lower state waiting periods increase the likelihood of restricted work which substitutes for days away from work especially for hard-to-diagnose injuries. Our results suggest that failure to control for restricted work may yield downward biased estimates of the direct effect of income replacement on work loss.