WI20-02: Employer Incentives in Return to Work Programs

Early intervention may be crucial to provide disabled workers with the necessary care and accommodation needed to sustain employment after disability, and employers can play a key role in early intervention by providing physical accommodations, flexible work schedules, or alternative tasks. In this project we will analyze the impact of employer incentives on employment outcomes for the disabled, and assess potential implications for disability benefit take-up. Many return to work policies focus on introducing worker incentives to return to work, despite the fact that employers also play a key role in enabling workers with disabilities to remain connected to the labor force. Our study will fill this gap by providing new evidence about the role of employer incentives in Oregon’s workers’ compensation (WC) system. We analyze a return-to-work program that provides wage subsidies, reimbursements for accommodations and worksite modifications to encourage employers to retain injured workers. Using detailed administrative claims data on workplace injuries linked with quarterly wage records over the past two decades, we will estimate the effects of these employer incentives on employment outcomes for the disabled. We will incorporate these estimates in a model to assess the welfare effects of alternative policies. These findings will provide novel estimates of employer-side incentives in return-to-work policies, and yield insights to academics and policymakers on the optimal design of policies to protect workers against injury and disability.