The Workers’ Compensation Research Institute (WCRI) shared findings from a study they published almost ten years ago, as it could shed light on how a typical recession impacts return to work for injured workers.

The study is tilted “Recession, Fear of Job Loss, and Return to Work”. It primarily asks what the impact is of doubling the unemployment rate on the probability of longer-term unemployment, defined as being out of work for 2.5 years after injury.

The current situation is different from a typical recession since things have happened much faster than in a typical recession – restaurants and bars are closed, sporting events are canceled, congregations of people is discouraged. An injured worker in some segments of the economy may have limited ability to return to work during the shut-down.

The economy may recover quickly after the bans are lifted, and longer-term unemployment may be limited due to the potential quick turnaround, though it is possible that some businesses will take a permanent hit due to the closures. So the results of this study, from 2010, may be somewhat limited in terms of its application to our current situation.

The study looks at two different channels of impact of a recession on return to work. One is the direct effect, where workers hoping to return to work find that opportunities are scarcer, and their return is delayed. The other is the indirect effect, where workers may fear a loss of their job if they don’t return to work, so they try to come back quickly.

The study used WCRI’s Worker Outcomes Surveys prior to the Great Recession to evaluate how variations in the local unemployment rate affect return to work of those injured at work through the two channels identified above. The workers in these surveys were out of work due to injury for more than seven days, a group more likely to feel the impact of a recession on return to work. The study asked what the impact would be on longer-term unemployment of doubling the unemployment rate from 5 to 10 percent. Longer-term unemployment is defined as not returning to work within 2.5 years after injury.

The study showed that for the direct effect, doubling the unemployment rate increases the percentage of injured workers experiencing longer-term unemployment from 14.7 percent to 18.7 percent due to lack of available jobs. For the indirect effect, doubling the unemployment rate increased the percentage of workers fearing job loss when injured from 35.5 percent to 51.3 percent. This increased fear of job loss resulted in an increase in the percentage of injured workers avoiding long-term job loss of 1.6 percentage points. This offsets the direct effect of the unemployment rate increase.

The net effect of an increase in the unemployment rate from 5 to 10 percent is to increase longer-term unemployment from 14.7 to 17.1 percent, or 16 percent.

The study also considered scenarios where the impact of a recession on the fear of job loss and resulting worker response is even greater than measured in the data (maybe because the data were collected prior to the Great Recession). In these scenarios, the probability of longer-term unemployment increases to a lesser extent than the net effect described above.

Read more here.