Strategy and Entrepreneurship
Authors / Editors
Brahmy F; Lafortunez J; Tessada J
We randomly distributed safety-related information treatments to SMEs –three to firm managers and one to workers. We find that only prevention information provided to workers leads to fewer and less severe accidents and an increase in prevention. Results are substantial, long-lasting, and concentrated in firms with higher treatment salience. We also observe wages falling and more substantial impacts for firms with better pre-existing manager-worker communication and safety standards. These results lead us to postulate that the mechanism at play is new prevention technology adoption rather than correcting workers’ beliefs about safety, mainly because only the former mechanism predicts a fall in wages. Because the technology-adoption mechanism is at play, we can use the experiment as an exogenous shift in workplace riskiness to estimate a compensating wage differential, which is found to be larger than the estimates from hedonic studies.