DOES REGULATORY ENFORCEMENT WORK - A PANEL ANALYSIS OF OSHA ENFORCEMENT

This study tests the impact of OSHA enforcement on workplace injuries. Using data on injuries and OSHA inspections for a panel of 6,842 larg e manufacturing plants between 1979 and 1985, we find significant spec ific deterrence effects. Inspections imposing penalties induce a 22% d ecline in injuries in the inspected plant during the following few yea rs. We suggest that narrow deterrence perspectives have led to unduly pessimistic assumptions about enforcement effectiveness and that a man agerial attention model is more consistent with our findings. In a tec hnical appendix we describe the Chamberlain technique, a powerful anal ytic approach for panel data that provides tests and corrections for p otential biases endemic in enforcement studies, including unmeasured h eterogeneity among units, serially correlated dependent variables, and endogeneity of inspections. We argue that more empirical studies of e nforcement impacts are necessary to provide an appropriate perspective for descriptive and analytic studies appraising regulatory behavior.