The Economics of Occupational Safety and Health

Economic incentives play an important role in occupational safety and health, affecting the behavior and decisions of workers, firms and government. This monograph discusses factors that affect workers’ decisions about whether to choose risky jobs, how careful to be on the job, and how long to remain off work during recovery from injury. The monograph also examines occupational risk-related costs that influence the following safety decisions of a firm: wage premiums paid to attract workers to risky jobs, premiums for workers’ compensation insurance, government fines for safety violations, and injury-related costs such as workplace disruptions and loss of worker specific job skills. This monograph also considers the influence of government, focusing on the enactment and enforcement of safety and health standards and the safety incentives of workers’ compensation insurance systems. We find broad consensus in the empirical literature that workers and firms respond to economic incentives in making safety decisions. Economic incentives play an important role in occupational risk prevention. Sometimes these incentives improve safety; but, in other cases they have an adverse effect on safety.