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 Safety; Accidents; Industrial Health; Job Satisfaction; Related Public Policy (jel J28), Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. (jel J31), Organization of Production (jel L23)
Publisher Tinbergen Institute
Persistent URL
Series Tinbergen Institute Discussion Paper Series
Journal Discussion paper / Tinbergen Institute
Buhai, I.S, Cottini, E, & Westergaard-Nielsen, N. (2008). The Impact of Workplace Conditions on Firm Performance (No. TI 2008-077/3). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from