Long-term Labour Market Performance of Whiplash Claimants

A whiplash is a sudden acceleration-deceleration of the neck and head, typically associated with a rear-end car collision that may produce injuries in the soft tissue. Often there are no objective signs or symptoms of injury, and diagnosing lasting whiplash associated disorders (WAD) is difficult, in particular for individuals with mild or moderate injuries. This leaves a scope for compensation-seeking behaviour. The medical literature disagrees on the importance of this explanation. In this paper we trace the long-term earnings of a group of Danish individuals with mild to moderate injuries claiming compensation for having permanently lost earnings capacity and investigate if they return to their full pre-whiplash earnings when the insurance claim has been assessed. We find that about half of the claimants, those not granted compensation, return to an earnings level comparable with their pre-whiplash earnings suggesting that these individuals do not have chronic WAD in the sense that their earnings capacity is reduced. The other half, those granted compensation, experience persistent reductions in earnings relative to the case where they had not been exposed to a whiplash, even when they have a strong financial incentive to not reduce earnings. This suggests that moderate injuries tend to be chronic, and that compensation-seeking behaviour is not the main explanation for this group. We find that claimants with chronic WADs used more health care in the year prior to the whiplash than claimants with non-chronic cases. This suggests that lower initial health capital increases the risk that a whiplash causes persistent WAD.