Workplace Injuries and Job Flows

The growth rates of workplace injury and illness rates exhibit a negative (time-varying) mean and a pro-cyclical response to variations in economic activity, as they decline in recessions before rebounding (and overshooting) during economic recoveries. Using a structural time series model, it is shown that this business cycle behavior is driven by job flows. In recessions, the acceleration of job destruction increases the growth rate of workplace injury and illness incidence rate (which is indicative of moral hazard), while the slowdown in job creation depresses this growth rate by reducing the proportion of workers of short job tenure.