Are Alternative Work Arrangements a Risk Factor for Long-term Disability and Labor Force Exit?

The contingent workforce in the US is growing rapidly. The proportion of workers participating in "alternative work arrangements" increased from 10.7% in 2005 to 15.8% in 2015. Although gig economy jobs involving online intermediaries have received considerable media attention, workers employed through temporary help agencies, professional employer organizations, and other types of contracting firms outnumber gig economy workers 10-to-1, and employment through contract firms was the fastest-growing form of alternative work arrangement between 2010 and 2015 (Katz and Kruger, 2016).

Despite evidence that temporary work is detrimental to health, safety, and career outcomes, little is known about whether temporary workers injured on the job experience worse return to work outcomes or face an elevated risk of long-term disability and labor force exit. If temporary workers experience greater risk of disability and labor force exit after injury, then injured temporary workers may constitute an identifiable and high-priority population for early intervention strategies to improve employment outcomes and prevent long-term disability. A major challenge in comparing the impact of injury between temporary workers and direct-hire workers is that temporary workers have worse employment prospects than similar direct-hire workers even in the absence of disabling workplace injuries, making it difficult to define a valid counterfactual for the labor market outcomes of temporary workers (Autor and Houseman, 2010).

In this study, we leverage a unique dataset from California that links workers' compensation claims to longitudinal earnings histories from the state Unemployment Insurance (UI) system. By combining industry data from the UI system with injury data from the workers' compensation sytem, we are able to compare the post-injury labor market outcomes between temporary workers and direct-hire workers injured at the same type of job (e.g., warehouse workers, low-wage carpenters, or dried fruit packers) while controlling for other observables such as demographics, job characteristics, firm characteristics, and the type and severity of injury. To estimate the causal impact of injury on labor market outcomes, we use nearest-neighbor matching between injured and uninjured workers on the basis of earnings and employment histories prior to the injury date. We can then compare the impact of injury between temporary and direct-hire workers. Alternative control groups consisting of injured workers with medical-only workers' compensation claims (i.e., without any lost work days) are used to assess robustness.

References

Autor, David H, and Susan N Houseman. 2010. “Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from ‘Work First.’” American Economic Journal: Applied 2 (3): 96–128.

Katz, Lawrence F, and Alan B Krueger. 2016. “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015.” 22667. NBER Working Paper Series. Cambridge, MA.