Business cycles and workplace accidents in Iceland 1986- 2011

Abstract

This study is the first to explore the association between business cycles and workplace accidents using Icelandic data. The relationship is evaluated for the entire labor market, for specific sectors, by gender and by the severity of injuries. Most prior research has found workplace accidents to be pro-cyclical. Hypothesized reasons include increased labor supply and greater work intensity in upswings, and that accidents are more likely to be reported. Aggregate data for workplace accidents from the Administration of Occupational Safety and Health and several macroeconomic indicators from Statistics Iceland and Directorate of Labour were examined. The time series were non-stationary so first differences were used to detrend them. Their relationship was then examined using a linear regression model. Data from the Directorate of Health in Iceland and Statistics Iceland were used to calculate the relative risk of an accident. Pro-cyclical associations between business cycles and work-place accidents were observed, particularly in construction, in commerce and for men. The results of the relative-risk calculations indicated that workers were at considerably greater risk of having an accident in 2007 than in 2004-2006 and 2008-2011. By comparing the different estimations of the study, one can conclude that only a small part of the variability of risk can be explained by changes in labour supply. Increased risk at work, given the labor supply, seems to be a more significant reason for increased prevalence of accidents during periods of economic expansion.