Measuring the impact of occupational accidents on value-added labor productivity in Korea

This study applies econometric methodologies to conduct a quantitative assessment of the overall impact of occupational accidents on changes in firms' labor productivity. In particular, it examines whether the magnitude of this impact varies according to the technological intensity required for production and further explores the mechanisms through which occupational accidents affect productivity, as well as the duration of these effects. The empirical results demonstrate that increases in occupational accident rates are significantly associated with declines (1%p increase in the accident rate reduces 3.9% in the average labor productivity) in labor productivity, with such adverse effects evident in both very low- and very high-technology firms. Moreover, the analysis identifies a self-reinforcing vicious cycle for approximately 3 to 4 years, wherein higher accident rates lead to productivity deterioration, exacerbating accident incidence. The findings also indicate that a substantial period (about 2 to 3 years) is required for firms to recover from productivity losses attributable to occupational accidents. Our findings catalyze firms to undertake proactive and voluntary measures to prevent occupational accidents and will provide an empirical foundation for policy interventions targeting vulnerable groups that are disproportionately affected by productivity losses resulting from such incidents.