the economics of health and safety at work: An interdiciplinary review of the theory and policy

Abstract

This paper engages an interdisciplinary survey of the current state of knowledge related to the theory, determinants and consequences of occupational safety and health (OSH). It first describes the fundamental theoretical construct of compensating wage differentials, which is used by economists to understand the optimal provision of OSH a perfectly competitive labour market. The plethora of incentives faced by workers and firms job and insurance markets that determine the ultimate level of OSH are discussed detail. The extensive empirical evidence from the hedonic wage and stated choice approaches used to assess the value of OSH is reviewed. The causes of inefficiency and inequity the market for OSH, such as externalities, moral hazard compensation insurance, systematic biases individual risk perception/well-being and labour market segregation are subsequently examined. The implications of government intervention and regulation for tackling the aforementioned inefficiencies OSH are then considered. Finally, the survey identifies areas of future research interests and suggests indicators and priorities for policy initiatives that can improve the health and safety of workers modern job markets. © 2011 Blackwell Publishing Ltd.