An Income Efficiency Model Approach to the Economic Consequences of the OSHA Cotton Dust Regulations

Australian Journal of Management, Vol. 26, No. 1, pp. 69-89, June 2001

15 Pages Posted: 17 Aug 2008 Last revised: 23 Feb 2018

See all articles by Ehsan H. Feroz

Ehsan H. Feroz

University of Washington, Milgard School of Business-Accounting ; University of Illinois at Urbana-Champaign; Government of the United States of America - US GAO Advisory Council; University of Minnesota, Labovitz School of Business-Department of Accounting; University of Minnesota, Carlson School of Management-Department of Accounting; American Accounting Association

Raymond L. Raab

University of Minnesota, Duluth - Labovitz School of Business and Economics (LSBE)

Stephen Haag

University of Denver

Date Written: August 14, 2008

Abstract

Theories of regulation have generally been tested by using a regression approach or an an event study approach. This paper was inspired by the Coase (1937) theory of the firm. It used Data Envelopment Analysis (DEA) to test the economic consequences of the Occupational Health and Safety Administration (OSHA) cotton dust standards by comparing the managerial efficiency of the firms affected by the cotton dust for the years before and after the US Supreme Court upheld the decision in 1981. Accounting inputs of common equity, total assets, and production costs were minimized while the total revenue was maximized. Controlling for the effects of imports for consumption providing for asymmetric disadvantages to US firms, we found that surviving firms had become more productively efficient during the post regulatory period as predicted. Apparently, these firms were able to accommodate the dust standard, reduce costs, and improve the operating efficiency of these firms simultaneously. These results indicate the usefulness of DEA as an alternative method of testing the theories of regulation.

Keywords: Coase Theory of the Firm, Regulation, Economic Consequences, OSHA, Cotton Dust, Data Envelopment Analysis (DEA), Political Economy

JEL Classification: C44, C61, C67, D57, D61, E23, F02, G18, K23, L67, M11, M41, P16, G30, H10, I22, L30, L31, L51, M40

Suggested Citation

Feroz, Ehsan H. and Raab, Raymond L. and Haag, Stephen, An Income Efficiency Model Approach to the Economic Consequences of the OSHA Cotton Dust Regulations (August 14, 2008). Australian Journal of Management, Vol. 26, No. 1, pp. 69-89, June 2001. Available at SSRN: https://ssrn.com/abstract=1226227

Ehsan H. Feroz (Contact Author)

University of Washington, Milgard School of Business-Accounting ( email )

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University of Illinois at Urbana-Champaign ( email )

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Government of the United States of America - US GAO Advisory Council ( email )

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University of Minnesota, Carlson School of Management-Department of Accounting ( email )

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American Accounting Association ( email )

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Raymond L. Raab

University of Minnesota, Duluth - Labovitz School of Business and Economics (LSBE) ( email )

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Duluth, MN 55812-3029
United States

Stephen Haag

University of Denver

2201 S. Gaylord St
Denver, CO 80208-2685
United States

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