Workers' risk understimation and occupational health and safety regulation

Stavros Drakopoulos, Ioannis Theodossiou

Research output: Working paper

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Abstract

The standard treatment of occupational risk in the labour market is conducted in terms of the theory of compensating wage differentials, the basic characteristic of which is that workers can fully estimate actual occupational risks. However, research in cognitive psychology, and recent advances in economic psychology, suggest that individuals consistently underestimate risks associated with accidents. In this paper, we discuss the case when the workers systematically underestimate job risks. After presenting the standard treatment of occupational risks, and of health and safety at work regulation, we then proceed to incorporate the idea of job risk underestimation. The paper discusses the types and impact of regulation on health and safety effort in a simple framework in which workers¿ beliefs concerning accident risks also play a role. The paper shows that a particular type of regulatory intervention is necessary for the risk underestimating workers not to suffer a welfare loss.
Original languageEnglish
PublisherUniversity of Aberdeen
Pages1-22
Number of pages23
Publication statusPublished - 2011

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Occupational health
Safety regulations
Workers
Health and safety
Accidents
Compensating wage differentials
Labour market
Economic psychology
Cognitive psychology
Welfare loss

Cite this

Workers' risk understimation and occupational health and safety regulation. / Drakopoulos, Stavros; Theodossiou, Ioannis.

University of Aberdeen, 2011. p. 1-22.

Research output: Working paper

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