Recessions are bad for workplace safety

Workplace accidents are an important economic phenomenon. Yet, the pro-cyclical fluctuations in workplace accidents are not well understood. They could be related to fluctuations in effort and working hours, but workplace accidents may also be affected by reporting behavior. Our paper uses unique data on workplace accidents from an Austrian matched worker-firm dataset to study in detail how economic incentives affect workplace accidents. We find that workers who reported an accident in a particular period of time are more likely to be fired later on. And, we find support for the idea that recessions influence the reporting of moderate workplace accidents: if workers think the probability of dismissals at the firm level is high, they are less likely to report a moderate workplace accident

Does Strict Employment Protection Legislation Influence the Rate of Workplace Accidents?

This paper explores the correlation between employment protection legislation (EPL) and the rate of workplace accidents, using a theoretical model and data for OECD countries. EPL has been rolled back in most OECD countries since the mid-80s. In parallel, there has been a decrease in the number of workplace accidents reported, especially non-fatal ones. We ask the question whether less employment protection could have contributed to the reduction in accident rates, for example by reducing workers’ willingness to report accidents. To investigate, we build a theoretical model, which suggests that the incentives to report workplace accidents are complex and could even result in a negative relationship between EPL and accident reporting. It is possible for example that labour market reforms reduce job security and incentivise behaviours that bring immediate benefits, like accident reporting. The empirical analysis, using a database of 16 OECD countries, supports the view that the dilution of EPL for regular contracts has increased the rate of accident reporting. This result is robust after controlling for a number of other factors, such as the unemployment rate, economic growth, unemployment benefits, trade union density and temporary work

Are recessions good for workplace safety?

Empirical evidence shows that in recessions the rate of workplace accidents goes down. This paper presents a theory and an empirical investigation to explain this phenomenon. The theory is based on the idea that reporting an accident affects the reputation of a worker and raises the probability that he is fired. If the unemployment rate is high, a worker faces a big loss when fired and fewer workplace accidents are reported. The empirical investigation concerns workplace accidents in 16 OECD countries. We conclude that cyclical fluctuations in workplace accident rates have to do with reporting behavior of workers and not with changes in workplace safety. Keywords: Workplace accidents; Unemployment JEL classification codes: I31; J2