Does Regulatory Enforcement Work? A Panel Analysis of OSHA Enforcement

TLDR

The Chamberlain technique, a panel data method correcting for biases such as unmeasured heterogeneity, serial correlation, and inspection endogeneity, is described in a technical appendix. The study tests OSHA enforcement’s impact on workplace injuries and argues that more empirical studies are needed to properly evaluate regulatory behavior. The study analyzes injury and inspection data from 6,842 large manufacturing plants (1979‑1985) using panel methods to assess deterrence effects. Inspections with penalties reduced injuries by 22% in the inspected plant over subsequent years, indicating significant specific deterrence, and suggesting that a managerial attention model better explains enforcement effectiveness than narrow deterrence perspectives.

Abstract

This study tests the impact of OSHA enforcement on workplace injuries. Using data on injuries and OSHA inspections for a panel of 6,842 large manufacturing plants between 1979 and 1985, we find significant specific deterrence effects. Inspections imposing penalties induce a 22% decline in injuries in the inspected plant during the following few years. We suggest that narrow deterrence perspectives have led to unduly pessimistic assumptions about enforcement effectiveness and that a managerial attention model is more consistent with our findings. In a technical appendix we describe the Chamberlain technique, a powerful analytic approach for panel data that provides tests and corrections for potential biases endemic in enforcement studies, including unmeasured heterogeneity among units, serially correlated dependent variables, and endogeneity of inspections. We argue that more empirical studies of enforcement impacts are necessary to provide an appropriate perspective for descriptive and analytic studies appraising regulatory behavior.