How Productive Is Workplace Health and Safety?

In this paper, we investigate the causal impact of workplace health and safety practices on firm performance, using Danish longitudinal matched employer–employee data merged with unique cross-sectional representative firm survey data on work environment conditions. We estimate standard production functions, augmented with workplace environment indicators, addressing both time-invariant and time-varying potentially relevant unobservables in the production process. We find positive and large productivity effects of improved physical dimensions of the health and safety environment, specifically, “internal climate” and “monotonous repetitive work”.