Do Temporary Workers Experience Additional Employment and Earnings Risk after Workplace Injuries?

Abstract

Do temporary workers face more employment and earnings risk than direct-hire workers? We link administrative workers’ compensation claims to earnings records to measure the risk posed by workplace injuries, comparing employment and earnings outcomes between temporary and direct-hire workers injured doing the same job. We implement two complementary empirical strategies to account for underlying differences in labor market attachment. Despite evidence that injury severity does not vary between the two sets of workers, temporary workers suffer larger reductions in employment and more severe earnings losses, persisting at least three years after injury, relative to similar direct-hire workers. The additional earnings losses suffered by temporary workers are partially offset by workers’ compensation benefits, but the income loss gap is still large even after accounting for these benefits.