The Effects of Import Competition on Worker Health

Abstract

Occupational health is an important determinant of workers’ welfare. Our theory predicts that firms facing greater shutdown risk reallocate resources to improve productivity at the expense of safety. Therefore, safety worsens at firms facing greater shutdown risk due to import competition. We test this prediction with novel data on injuries at US manufacturers using Chinese import growth in 1996-2007 as a shock to competition. The data show that injury rates in the competing US industries increase over the short to medium run, particularly at smaller establishments. Back of the envelope calculations show that injury risk increases by 13 percent at the smallest establishments, costing workers the equivalent of a 1 to 2 percent reduction in annual wages.