Dynamic Panel Analysis of Construction Accidents in Hong Kong

Abstract The construction industry is one of the riskiest industries with a large number of deaths and injuries every year. Large amounts of money are spent annually on workers’ compensation. Thus, it is important to investigate the factors which affect accident compensation in the eyes of judges. In this research paper, we utilized the court case reports available in HKLII from 2000 to 2015. Most of the victims have studied in secondary schools, are aged between 30 and 49 and have a monthly salary of less than HK$20,000. All the data were then analyzed and summarized by the content analysis method. After that, we used the Markov Chain Monte Carlo simulation and System-GMM dynamic panel econometrics method to study the dynamic relationship between these factors and the compensation for accidents. Academically, analysis of accident compensation in the past usually depended on analysis by the labour department. There is a limited number of quantitative court case reports analysis based on economic modelling. Furthermore, none of the previous research utilized the dynamic panel technique to study the relationships. It also fills the gap of the research in identifying whether non-Cantonese speakers are in disadvantage positions when they seek for compensation, longer hearings favour the contractors and whether mental disorder after accident shall lead to larger amount of compensation. Practically, the research offer important information for contractors and employers who may need to pay compensation due to workers’ accidents. The results show that non-Cantonese speakers receive less compensation as compared to locals and court cases with longer hearings are usually associated with larger amount of compensation. There is, however, no significant difference between victims with and without mental disorder in terms of compensation.