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Are recessions good for workplace safety?

Jan Boone1, Jan C van Ours

  • 1Department of Economics, Tilburg University, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands. j.boone@uvt.nl

Journal of Health Economics
|May 13, 2006
PubMed
Summary

During economic downturns, workplace accident rates decrease because workers fear job loss. This study finds that reporting behavior, not safety, explains these cyclical fluctuations.

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Area of Science:

  • Labor Economics
  • Occupational Safety and Health
  • Behavioral Economics

Background:

  • Empirical data indicate a negative correlation between economic recessions and reported workplace accidents.
  • Existing theories do not fully account for the decline in accident rates during economic downturns.

Purpose of the Study:

  • To propose and test a theory explaining why workplace accident rates decline during economic recessions.
  • To investigate the role of worker reporting behavior in cyclical fluctuations of workplace accidents.

Main Methods:

  • Development of a theoretical model linking worker reputation, job loss probability, and accident reporting.
  • Empirical analysis of workplace accident data from 16 Organisation for Economic Co-operation and Development (OECD) countries.

Main Results:

  • The study's theory suggests that increased unemployment raises the cost of job loss, incentivizing fewer accident reports.
  • Empirical findings support the theory, indicating that reporting behavior is the primary driver of cyclical accident rate variations.
  • No significant evidence suggests changes in actual workplace safety levels correlate with economic cycles.

Conclusions:

  • Cyclical fluctuations in reported workplace accidents are primarily driven by changes in worker reporting behavior, not by alterations in workplace safety.
  • The fear of job loss during recessions significantly influences workers' decisions to report accidents.
  • Policy implications may involve addressing reporting biases rather than solely focusing on safety measures during economic downturns.

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