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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 08-13:
The impact of workplace conditions on firm performance

Sebastian Buhai (), Elena Cottini () and Niels Westergaard-Nielsen ()

Abstract: This paper estimates the impact of work environment health and safety practice on …rm performance, and examines which …rm-characteristic factors are associated with good work conditions. We use Danish longitudinal register matched employer-employee data, merged with …rm business accounts and detailed cross-sectional survey data on workplace conditions. This enables us to address typical econometric problems such as omitted variables bias or endogeneity in estimating i) standard production functions augmented with work environment indicators and aggregate employee characteristics and ii) …rm mean wage regressions on the same explanatory variables. Our …ndings suggest that improvement in some of the physical dimensions of the work health and safety environment (speci…cally, "internal climate" and "repetitive and strenuous activ- ity") strongly impacts the …rm productivity, whereas "internal climate" problems are the only workplace hazards compensated for by higher mean wages.

Keywords: Occupational health and safety; Work environment; Production function estimation; Firm performance; Compensating wage differentials; (follow links to similar papers)

JEL-Codes: J28; J31; L23; (follow links to similar papers)

40 pages, June 23, 2008

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