RESULTS ON EARNINGS LOSSES AND REPLACEMENT RATES
In this chapter and the three chapters that follow, we report the empirical results of our research. First, in this chapter, we report our estimates of earnings losses and replacement rates for workers injured at private, self-insured firms. We also compare earnings losses for self- insured employers to new estimates for the same injury years for insured employers.
In Chapter 5, we compare post-injury employment patterns at self-insured employers with those at insured employers to evaluate the claim that return-to-work is better at self-insured firms. In Chapter 6, we examine differences in losses, replacement rates, and uncompensated earnings losses by severity of injury. Finally, in Chapter 7, we empirically explore the explanation for differences between the self-insured and insured firms, focusing on the impact of firm size on proportional earnings losses and pre-injury earnings on replacement rates.
Figure 4-1 shows the average quarterly earnings of permanent disability claimants at private, self-insured firms in 1993 before and after injury, along with the average quarterly earnings of their comparison group. The earnings peak at Quarter 0, the quarter of injury, because all employees are observed working at the at-injury employer for at least part of that quarter.1 In any other quarter, some individuals (both injured workers and comparison workers) will have no EDD earnings reported and will be assumed to have zero earnings.
Examination of the 12 quarters prior to injury provides a check on the quality of the controls in terms of providing an accurate comparison. The injured workers and comparison workers are matched on the basis of average quarterly earnings over the four quarters prior to injury. The average earnings difference for the first to fourth quarters prior to the match period is $68, and for the fifth to eighth quarters prior to the match period, the difference is $32. This slight difference among the quarters before the match period suggests that the comparison workers are high-quality controls for the injured workers.
In the first quarter after injury, average earnings of injured workers drop 21 percent relative to their comparison workers. Little evidence of recovery in earnings is observed over the____________________