Are recessions good for workplace safety?

Abstract

Empirical evidence shows that in recessions the rate of workplace accidents goes down. This paper presents a theory and an empirical investigation to explain this phenomenon. The theory is based on the idea that reporting an accident affects the reputation of a worker and raises the probability that he is fired. If the unemployment rate is high, a worker faces a big loss when fired and fewer workplace accidents are reported. The empirical investigation concerns workplace accidents in 16 OECD countries. We conclude that cyclical fluctuations in workplace accident rates have to do with reporting behavior of workers and not with changes in workplace safety.