Accident-Induced absence from work and wage growth

Abstract

How do short absences from work affect workers’ labor trajectory? We use linked employer-employee administrative data from Hungary, with rich administrative health records, and use unexpected and mild accidents with no permanent labor productivity losses as exogenous drivers of short absences. Our Differencein-Differences results show that, relative to the counterfactual of no accident, even short (3–6-months long) periods of absence due to accidents decrease wages for up to two years by 1.5 percent, and workers end up with lower-paying firms. Missed opportunities to move to higher-paying firms account for 7–37 percent of the wage loss over a two-year period.