Safety Regulation and Workplace Injuries

Abstract

Most public policy discussions of workplace injuries and safety regulation focus on the frequency with which injuries occur. This is the approach that dominates most economic studies of either the impact of industrial safety legislation or the more general economics of occupational health and safety.' None of the theoretical models of the firm's response to injury risk explicitly consider the severity of injuries [15; 16; 12; 4; 14; 25]. In empirical work, Cook and Gautschi's [6] finding that OSHA citation activity reduced days lost due to injuries in Maine manufacturing firms is the only case in which injury severity is addressed in a study of the impact of OSHA. Chelius [4] has used a severity measure in empirical analysis of pre-OSHA state safety regulation. The major studies of the impact of OSHA standards on injury frequency have found little or no impact attributable to this form of safety regulation [18; 25; 9]. The purpose of this study is to analyze the conjecture that the effect of OSHA safety regulation has been to reduce the severity of workplace injuries rather than the frequency with which they occur. The theoretical analysis of the impact of the standards on the frequency of injuries is extended to explicitly consider their impact on the severity of injuries. An index of injury severity is constructed using work injury records and impairment scales developed by the American Medical Association. A cross-section-time-series model is specified and estimated to test the impact of safety regulation on injury severity. The possible trade-off between injury frequency and severity is examined.