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Regulation enforcement

Gmeiner, Michael and Gmeiner, Robert (2022) Regulation enforcement. Journal of Labor Research, 43 (2). 163 - 202. ISSN 0195-3613

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Identification Number: 10.1007/s12122-022-09332-3

Abstract

This paper compares the effectiveness of two mechanisms of regulation enforcement: (1) the frequency of inspections and (2) penalties for violations. Threat effects of increased penalties and inspection rates, rather than corrective effects upon receiving an inspection or penalty, are the focus of analysis. Mining industry data from 2004–2009 are used to analyze the responses of mines to separate increases in inspections and citation penalties regarding regulations of safety standards. Mines did not improve safety in response to increased penalties at the ex-ante inspecting rates; however, mines significantly reduced accidents under increased inspections when implemented at those higher penalty rates. The identification strategy results in a local average treatment effect that implies increasing inspection rates from current levels would likely increase social welfare. Results are shown to be robust to bandwidth changes and model specification. The interpretation of the estimated local effect in the context of selection is analyzed. Robustness checks regarding selection exploit staffing changes and restrict to similar samples of treated and non-treated mines, justifying that results are representative.

Item Type: Article
Official URL: https://www.springer.com/journal/12122
Additional Information: © 2022 The Authors
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: K - Law and Economics > K2 - Regulation and Business Law > K23 - Regulated Industries and Administrative Law
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law
J - Labor and Demographic Economics > J0 - General > J08 - Labor Economics Policies
Date Deposited: 13 Apr 2022 16:21
Last Modified: 14 Jul 2022 08:12
URI: http://eprints.lse.ac.uk/id/eprint/114895

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