But competing on safety is like a negative externality, like companies emitting pollution.
I do not think decreasing safety standards is like increasing pollution. Pollution decreases the quality of public goods like air and water bodies, which are often underprotected because the benefits are distributed across many people. In contrast, safety standards affect the health of workers, which is a private good, and therefore workers have a strong incentive to consider whether they are worth it.
Is there a specific country or example you would like to see safety standards held back on the grounds of higher employment? Iâve never heard of onerous safety standards being a cited as a reason for suppressed economic development. The Rana plaza fire safety reforms were widely lauded.
To clarify, I am not arguing that safety standards should be more or less strict. I just think they should be overwhelmingly determined by companies and workers instead of imposed by governments.
Empirical evidence about the effects of safety standards on employment is mixed, but this not surprising. There are lots of confounders, and it is difficult to rely on randomisation to isolate the effects of safety standards. However, âcost of labourâ = âworker-hoursâ*(âwage per worker-hourâ + âother costs per worker-hourâ), and imposing safety standards tends to increase âother costs per worker-hourâ, so companies will tend to decrease âworker-hoursâ and âwage per worker-hourâ to compensate, thus decreasing employment and wages.
The Indian state of Kerala is widely recognised as having high living standards relative to the rest of India due to the strong presence of militant unions and labour standards.
I think the causality goes the other way around. A higher income per capita means people are willing to pay more to protect their health, and therefore push for stricter safety standards.
You have a point that safety isnât a negative externality in the way pollution is. I will concede that. Never really thought of it like that.
To clarify, I am not arguing that safety standards should be more or less strict. I just think they should be overwhelmingly determined by companies and workers instead of imposed by governments.
Donât you think unions have an important role to play in this? Because as a worker, especially in a poor country, thereâs a lot of asymmetry. Itâs difficult and often impossible to assess the risk of a workplace before youâve started. You lack the expertise to understand the breadth of all the safety issues, and donât have the information readily available to accurately compare safety across different firms.
And if governments can step in, productively with union & employer stakeholders, set sensible rules on safety (minimum safety standards, workplace assessment ratings), that makes it much easier for workers to assess safety of different firms, make better judgements, bargain for higher pay at more dangerous firms, allocate their labour more economical efficiently. Helps employers compete too.
Maybe you are arguing against the rules being too inflexible? Maybe you are just against first world unions donât always have the interests of third world workers in mind but maybe third world unions are ok?
âThe Indian state of Kerala is widely recognised as having high living standards relative to the rest of India due to the strong presence of militant unions and labour standards.â
I think the causality goes the other way around. A higher income per capita means people are willing to pay more to protect their health, and therefore push for stricter safety standards.
I think itâs a good case study to challenge this line of argument. Iâd say that example is a clear case where the causality is opposite to how you described. A lot of the social democratic countries show that trend. The Nordic countries famously were amongst the poorest parts of Europe when they adopted the Nordic model pushed by militant labour movements in those countries.
I suspect prospective workers could get an idea of the safety risks by trying to talk with people who worked or work there. They could wait for them nearby the workplace. In some cases, they could also just work there to understand the conditions, and then quit if they do not like them.
I agree greater transparency about the working conditions is good, but I worry governments or unions pushing for rules on this may impose more costs than benefits.
I am not informed about Keralaâs case study. I guess there are many cases that fit my narrative, and others that do not. However, in general, I am very confident that having a higher income increases the willingness to pay for health. The value of a statistical life tends to increase with income.
I do not think decreasing safety standards is like increasing pollution. Pollution decreases the quality of public goods like air and water bodies, which are often underprotected because the benefits are distributed across many people. In contrast, safety standards affect the health of workers, which is a private good, and therefore workers have a strong incentive to consider whether they are worth it.
To clarify, I am not arguing that safety standards should be more or less strict. I just think they should be overwhelmingly determined by companies and workers instead of imposed by governments.
Empirical evidence about the effects of safety standards on employment is mixed, but this not surprising. There are lots of confounders, and it is difficult to rely on randomisation to isolate the effects of safety standards. However, âcost of labourâ = âworker-hoursâ*(âwage per worker-hourâ + âother costs per worker-hourâ), and imposing safety standards tends to increase âother costs per worker-hourâ, so companies will tend to decrease âworker-hoursâ and âwage per worker-hourâ to compensate, thus decreasing employment and wages.
I think the causality goes the other way around. A higher income per capita means people are willing to pay more to protect their health, and therefore push for stricter safety standards.
You have a point that safety isnât a negative externality in the way pollution is. I will concede that. Never really thought of it like that.
Donât you think unions have an important role to play in this? Because as a worker, especially in a poor country, thereâs a lot of asymmetry. Itâs difficult and often impossible to assess the risk of a workplace before youâve started. You lack the expertise to understand the breadth of all the safety issues, and donât have the information readily available to accurately compare safety across different firms.
And if governments can step in, productively with union & employer stakeholders, set sensible rules on safety (minimum safety standards, workplace assessment ratings), that makes it much easier for workers to assess safety of different firms, make better judgements, bargain for higher pay at more dangerous firms, allocate their labour more economical efficiently. Helps employers compete too.
Maybe you are arguing against the rules being too inflexible? Maybe you are just against first world unions donât always have the interests of third world workers in mind but maybe third world unions are ok?
I wouldnât be so quick to dismiss the Kerala case study. Kerala actually has a lower per capita income. https://ââen.m.wikipedia.org/ââwiki/ââKerala_model
I think itâs a good case study to challenge this line of argument. Iâd say that example is a clear case where the causality is opposite to how you described. A lot of the social democratic countries show that trend. The Nordic countries famously were amongst the poorest parts of Europe when they adopted the Nordic model pushed by militant labour movements in those countries.
Thanks for the follow up.
I suspect prospective workers could get an idea of the safety risks by trying to talk with people who worked or work there. They could wait for them nearby the workplace. In some cases, they could also just work there to understand the conditions, and then quit if they do not like them.
I agree greater transparency about the working conditions is good, but I worry governments or unions pushing for rules on this may impose more costs than benefits.
I am not informed about Keralaâs case study. I guess there are many cases that fit my narrative, and others that do not. However, in general, I am very confident that having a higher income increases the willingness to pay for health. The value of a statistical life tends to increase with income.