Permanent Disability at Private, Self-Insured Firms

A Study of Earnings Loss, Replacement, and Return to Work for Workers' Compensation Claimants

by Robert T. Reville, Suzanne Polich, Seth A. Seabury, Elizabeth Giddens


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Employers that self-insure for workers' compensation have greater incentives than insured employers to return injured employees to work as quickly as possible. And because self-insured firms typically are larger, they often have more opportunities to offer injured workers modified work. This report examines the consequences of a disabling workplace injury for workers at 68 private self-insured employers in California from 1991 through 1995. Using employer-provided data on permanent disability claims, which were then linked to longitudinal data from the state of California on earnings before and after injury, the authors estimate the earnings losses associated with a permanent disability and examine the post-injury employment patterns of permanent disability claimants. They found significant earnings losses for claimants at the self-insured firms — more than 20 percent of earnings over the five years after injury. The authors compared the experiences of workers at self-insured firms with workers at insured firms and found lower proportional losses at self-insured firms, but also slightly lower replacement rates. They also found better return to work at self-insured firms. However, when controlling for pre-injury earnings, industry, and firm size, differences in earnings losses between workers injured at self-insured and insured firms are diminished.

Table of Contents

  • Chapter 1

    Self-Insurance in California and Implications for Return to Work and Replacement of Lost Earnings

  • Chapter 2

    Measuring Earnings Losses and Replacement Rates

  • Chapter 3


  • Chapter 4

    Results on Earnings Losses and Replacement Rates

  • Chapter 5

    Comparing Results on Return to Work at Insured and Self-Insured Firms

  • Chapter 6

    Results on Earnings Losses and Replacement Rates by Severity of Injury

  • Chapter 7

    Explaining the Differences: the Impact of Firm Size and Pre-Injury Earnings on Wage Loss and Replacement Rates

  • Chapter 8

    Summary and Implications for Adequacy of Compensation

  • Appendix A

    Technical Appendix

  • Appendix B

    Responses from Workers' Compensation Stakeholders on Report Findings

This research was conducted within RAND's Institute for Civil Justice.

This report is part of the RAND Corporation monograph report series. The monograph/report was a product of the RAND Corporation from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

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