Unemployment and workplace injuries: evidence from California

ABSTRACT

Workplace safety is an important determinant of workers’ welfare. Empirical evidence shows the workplace injury rate decreases during recessions. This paper uses detailed administrative Workers’ Compensation claims from California to study the relationship between unemployment and workplace injuries at a more disaggregated level. We find that between 2001 and 2012, a 1% increase in the unemployment rate is associated with a 0.2% decrease in the claim rate. In addition, when the unemployment rate increases, the claim rate experiences a significant drop for the subgroups: (i) cuts or struck, (ii) upper/lower extremities or head injuries, (iii) specific injuries, (iv) male workers, (v) young workers, and (vi) insured companies. While the pro-cyclical relationship is strongly persistent across many of the subgroups, the varying magnitudes yield interesting policy implications.

KEYWORDS:

• Unemployment
• workplace injuries
• workers’ compensation

JEL CLASSIFICATION:

• E24
• I31
• J28

Acknowledgments

We thank the State of California Department of Industrial Relations, Division of Workers’ Compensation for the data support. We appreciate Ha Nguyen for the excellent research assistance. We also acknowledge the support of the University of Auckland Business School Faculty Research Grant. All errors are our own.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the University of Auckland.