Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251470 
Year of Publication: 
2022
Series/Report no.: 
ECON WPS - Working Papers in Economic Theory and Policy No. 02/2022
Publisher: 
TU Wien, Institute of Statistics and Mathematical Methods in Economics, Research Unit in Economics, Vienna
Abstract: 
This paper studies the provision of occupational safety when the labor market is subject to search frictions. While safety measures are costly for firms, they reduce workers' mortality. We show that the presence of search frictions decreases the socially optimal level of occupational safety relative to a frictionless labor market, leading to excess mortality. In a decentralized setting where wages and safety measures are bargained at the firm level, matching externalities and a labor supply externality may further reduce safety provision. We obtain conditions under which these externalities are internalized by firms and workers, and discuss the role of policy for promoting occupational safety. Calibrating the model to the US, we find that search frictions explain 8%-14% of the work-related mortality rate, which indirectly makes them the third largest cause of work-related death.
Subjects: 
occupational safety
mortality
search frictions
Nash bargaining
JEL: 
J17
J28
J32
J38
J64
Document Type: 
Working Paper

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