Description:
Market forces, supplemented by government policy, affect how firms and households jointly determine product and workplace safety levels. After developing the economic theory of how labor and product markets pair prices and health risks we then explain the effects of the relevant government policies, including information, tort liability laws, direct regulation of job and product attributes, and mandatory no-fault insurance to compensate injured parties. Each theoretical development is followed by econometric evidence concerning policy induced outcomes. An important finding is that the most influential economic incentives for product and job safety stem from the fact that people tend not to buy hazardous products or accept employment in hazardous jobs unless the price they pay or the wages they are paid compensate for health risks and safety risks. We conclude with policies of future interest, including greater attention to how one is injured or killed and the distributional impacts of policy.