Occupational safety and profit maximization: Friends or foes?
The rise of the Industrial Revolution is often depicted as a cause of hazardous working conditions and is skillfully epitomized in William Blake's tale of a child chimney sweeper. Conventional wisdom puts firm profit in conflict with occupational safety. We reexamine this argument noting that injuries are very costly to firms because they lead to higher wage premiums, worker compensation, and costly work stoppages. We hypothesize that it is precisely for these reasons that firms in the industries with dangerous working conditions have the strongest incentives to innovate and substitute more capital for labor. Using a longitudinal panel of U.S. industries, we test and confirm our hypothesis that higher injury rates lead to higher capital stock per worker, over time. Moreover, our estimates suggest that firms provide more capital and equipment per worker than what would have been there based solely on the compensating wage differential.
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Volume (Year): 39 (2010)
Issue (Month): 3 (June)
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- Sandra Schaffner & Jochen Kluve, 2007. "Gender Wage Differentials and the Occupational Injury Risk - Evidence from Germany and the US," Ruhr Economic Papers 0028, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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- Pavel A. Yakovlev, 2008. "Saving lives in armed conflicts: What factors matter?," Economics of Peace and Security Journal, Economists for Peace and Security, vol. 3(2), pages 68-73, July.
- Randall G. Kesselring & Jeffrey R. Pittman, 2002. "Drug Testing Laws and Employment Injuries," Journal of Labor Research, Transaction Publishers, vol. 23(2), pages 294-301, April.
- Hersch, Joni, 1998. "Compensating Differentials for Gender-Specific Job Injury Risks," American Economic Review, American Economic Association, vol. 88(3), pages 598-627, June.
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