This paper estimates the impact of work environment health and safety practice on firm performance, and examines which firm-characteristic factors are associated with good work conditions. We use Danish longitudinal register matched employer-employee data, merged with firm business accounts and detailed cross-sectional survey data on workplace conditions. This enables us to address typical econometric problems such as omitted variables bias or endogeneity in estimating i) standard production functions augmented with work environment indicators and aggregate employee characteristics and ii) firm mean wage regressions on the same explanatory variables. Our findings suggest that improvement in some of the physical dimensions of the work health and safety environment (specifically, “internal climate” and “repetitive and strenuous activity”) strongly impacts the firm productivity, whereas “internal climate” problems are the only workplace hazards compensated for by higher mean wages.

Additional Metadata
Keywords compensating wage differentials, firm performance, occupational health and safety, production function estimation, work environment
JEL J28, Safety; Accidents; Industrial Health; Job Satisfaction; Related Public Policy (jel), J31, Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. (jel), L23, Organization of Production (jel)
Publisher Tinbergen Institute
Persistent URL hdl.handle.net/1765/14031