Road injuries and long-run effects on income and employment

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SummaryThis paper investigates whether unexpected shocks in terms of road injuries ‘cause’ a permanent change in disposable income, earnings, employment, and public transfer income. We use ‘propensity score matching’ and apply a difference-in-difference matching method to estimate the counterfactual of what the disposable income, earnings, employment, and the amount of public transfer income would have been of a particular group of persons injured by road accidents if they had not in fact been injured. We find that road injuries have important consequences. Older injured persons and injured persons in the lower part of the income distribution have significantly lower disposable incomes than older and low-income non-injured persons. In both the short and the long run the employment rates for the injured men are significantly lower than for non-injured persons. No effects on the employment rate are found for women. Besides, earnings are reduced in the long run for men where significant effects are only found for older women. The analysis shows that both injured men and women are compensated in terms of a significant increase in public transfer incomes in both the short and the long run.JEL classification: I18; J28; J22; J23; C23; C52

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