Unemployment and Workplace Safety in a Search and Matching Model

Are recessions really good for workplace safety? This paper develops a model with search to consider the determinants of workplace safety and then investigates the relationship between unemployment and the incidence of work-related injury. There is a view following Arai and Thoursie (2005), Ruhm (2000) and Boone and van Ours (2006) that the rate of work-related injury is procyclical. However, data from several countries do not necessarily support this view. This paper considers an alternative approach to support the countercyclical variation in the rate of work- related injury in which the firm bargains about the optimal input for workplace safety.