The economic consequences of accidents at work

This paper investigates the economic consequences of workplace accidents in the British labour market. For the empirical analysis, I use data on employment and earnings from the British Household Panel Survey and exploit fixed effects estimators to control for time-invariant unobserved workers’ characteristics. I provide evidence that accidents at work negatively affect both job opportunities and workers’ earnings. First, employment probabilities following a state of injury are significantly lower. This effect persists over time and is stronger in those regions where the macroeconomic conditions are worse. Second, a serious workplace accident also results in significant delayed wage penalties, which increase with the accident’s seriousness. The effect is lower in the public sector and unionized firms, where job and earnings protection is higher and physically demanding working conditions are not widespread, or if the worker moves to a new job which suits his/her post-injury abilities better.