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

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 U.S. 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 non-compliance. 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.

Wage Inequality and Labor Rights Violations

“…Charles et al (2019) show that MSHA violations increase when mines experience a positive demand shock.…”

Pain Management and Work Capacity: Evidence From Workers’ Compensation and Marijuana Legalization

“…Alternatively, economy-wide positive demand shocks may lead employers to prioritize workplace safety and training(Charles et al, 2019), thus minimizing the risk of a work-related injury and WC receipt.23 See https://www.nolo.com/legal-encyclopedia/state-laws-on-off-duty-marijuana-use.html.24 We exclude the survey collected in 2020 (which captures income in 2019) due to the COVID-19 pandemic.25 The American Community Survey does not collect information specifically on WC benefit receipt.26 There was a change in the ordering of some income questions in 2014 in the ASEC(Hill et al, 2019). We do not suspect that this change impacts our analysis since we include year fixed effects in all regressions.Journal of Policy Analysis and ManagementPublished on behalf of the Association for Public Policy Analysis and Management…”