Better Labor Market Options Reduce Workplace Injuries.


Are workers with worse outside options subject to greater health and safety risks in the workplace? A large body of work demonstrates that workers’ wages respond to their outside options in the labor market. Health and safety risk is an important part of workers’ welfare and non-wage compensation. To the extent that the provision of workplace health and safety is costly for firms, workers with better outside options may be more able to demand a safer workplace, or more able to leave their job, if workplace safety is not satisfactory. We investigate this relationship, using a shift-share instrumental variable strategy to generate plausibly exogenous shocks to workers’ wages in local jobs outside their occupation and estimating the effect of these shocks on workplace injuries, as measured using administrative data on the universe of workers’ compensation claims in California over 2002-2018. We find that a 1 log point improvement in workers’ outside-occupation options is associated with a 0.3-0.5 log point lower injury rate within the occupation, suggesting a substantial responsiveness of workplace health and safety to labor market conditions.


If you have any questions regarding the seminar, please contact the seminar organizers Alexander Willen or Linda Hundsnes.