Does Cleaning the Air Affect Workers’ Health? How Firms Manage Competing Regulatory Demands

Most firms in the U.S. are simultaneously regulated by multiple regulatory agencies. These agencies rarely, if ever, consider how their actions to promote compliance with their own standards might affect firms’ inputs into compliance with standards of other agencies. This paper investigates whether and why such regulatory spillovers occur by analyzing how firms trade off regulatory demands. Heightened oversight in one regulatory domain may, on one hand, lead firms to reallocate inputs away other domains; on the other hand, if are complementary inputs into compliance, it may increase firms’ compliance in both domains. I investigate this relationship empirically by studying how stricter air quality regulation affects plants’ occupational safety and health regulatory compliance and performance. Using variation induced by a 2004 revision to the Clean Air Act’s ozone standard, I find that, on average, air quality regulation leads to 9 percent more violations of safety and health standards. The effect only holds for smaller plants, where compliance efforts across domains are most likely substitutes, and there is no effect on compliance with standards that have likely complementarities with air quality regulation. Furthermore, regulated plants experience 3.5 percent higher rates of workplace injuries and illnesses. A back-of-the-envelope calculation suggests the higher injuries and illnesses resulted in social cost of $45 million per year, which is roughly 5 percent of the estimated annual cost of implementing the 2004 ozone air quality standard. ∗Email addresses: [email protected]. I wish to thank Kevin Lang, Johannes Schmieder, Seth Sanders, and Michael Toffel for invaluable guidance. I also thank Mark Curtis, Manasi Deshpande, Rob Fetter, Scott Harris, David Levine, Michael Lipsitz, Jay Shimshack, and Jonathan Wiener for helpful discussion, and seminar participants at Duke University and North Carolina State University. Mitchell Ochse provided excellent research assistance. The usual caveat applies.