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Real Effects of Information Frictions Within Regulators: Evidence from Workplace Safety Violations

The Occupational Safety and Health Administration (OSHA) is run state by state, meaning the sharing of case information within OSHA is decentralized. This decentralization leads to potential informational frictions. We study whether information frictions within OSHA affect firm violations of workplace safety laws. We find evidence of geographic substitution, i.e., firms caught violating in one state subsequently violate less in that state, instead shifting violations elsewhere. We also find evidence of two key informational channels: inspections and deterrence. We find that violations in one state do not influence OSHA inspection decisions in other states. We also find that penalty severity decreases for firms previously violating in a different state, consistent with frictions limiting the sharing of documentation required by statute to assess these penalties. While prior work has highlighted the effects of information asymmetry between regulators and firms on firm behavior, our findings suggest that information asymmetry within regulators matters as well.

Speaker: Dr Aneesh Raghunandan
Assistant Professor, London School of Economics
When:
4.00 - 5.00 pm
Venue: Webinar
Contact: Office of the Dean
Email: SOAR@smu.edu.sg