Workplace Injuries and Job Flows

Abstract:     
The time series properties of the growth rates of BLS (Bureau of Labor Statistics) workplace injury and illness incidence rates are analyzed for manufacturing (1927-2007) and all private industry (1973-2007). These growth rates exhibit a negative (time varying) mean and a pro cyclical response to variations in economic activity, as they decline in recessions before rebounding (and overshooting) during economic recoveries. Using a structural time series model, it is shown that this business cycle behavior is driven by job flows. In recessions, the acceleration of job destruction increases the growth rate of workplace injury and illness incidence rate (which is indicative of moral hazard), while the slowdown in job creation depresses this growth rate by reducing the proportion of workers of short job tenure with the current employer. On net, the effect of job creation dominates quantitatively, thus generating the observed pro cyclical behavior of the growth rate of workplace injury and illness incidence rates.

Number of Pages in PDF File: 51

Keywords: Workplace injuries, job flows, moral hazard

JEL Classification: J28, J64

working papers series