Journal of Labor Economics Vol. 40 No. 1 2022

Demand Conditions and Worker Safety: Evidence from Price Shocks in Mining

Kerwin Kofi Charles¹; Matthew S. Johnson²; Melvin Stephens³; Do Lee⁴

¹ National Bureau of Economic Research · ² Duke University · ³ University of Michigan–Ann Arbor · ⁴ New York University

Abstract

We investigate how demand conditions affect employers’ provision of safety—something about which theory is ambivalent. Positive demand shocks relax financial constraints that limit safety investment but simultaneously raise the opportunity cost of increasing safety rather than production. We study the US metals mining sector, leveraging exogenous demand shocks from short-term variation in global commodity prices. We find that positive price shocks substantially increase workplace injury rates and safety regulation noncompliance. While these results indicate the general dominance of the opportunity cost effect, shocks that only increase mines’ cash flow lower injury rates, illustrating that financial constraints also affect safety.

DOI

10.1086/713887

Volume

40

Issue

1

Pages

47-94

Language

en

Sources

openalex crossref

Cite

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