WORK DISINCENTIVES OF WORKERS-COMPENSATION PERMANENT PARTIAL DISABILITY BENEFITS - EVIDENCE FOR CANADA

This paper examines the impact of workers' compensation benefits and e xpected 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 ha ving a pure income effect on post-injury employment behaviour. The est imation results indicate an elasticity of post-injury employment to wo rkers' compensation permanent disability benefits of -0.15, evaluated for the mean worker. The elasticity of post-injury employment to expec ted post-injury labour market earnings is about 0.94 per cent.