No Pain, No Gain: Work Demand, Work Effort, and Worker Health

Abstract

Increased job effort can raise productivity and income but put workers at increased risk of illness and injury. We combine Danish data on individuals' health with Danish matched worker-firm data to understand how rising exports affect individual workers' effort, injury, and illness. We find that when firm exports rise for exogenous reasons: 1. Workers work longer hours and take fewer sick-leave days; 2. Workers have higher rates of injury, both overall and correcting for hours worked; and 3. Women have higher sickness rates. For example, a 10% exogenous increase in exports increases women's rates of injury by 6.4%, and hospitalizations due to heart attacks or strokes by 15%. Finally, we develop a novel framework to calculate the marginal disutility of any non-fatal disease, such as heart attacks, and to aggregate across multiple types of sickness conditions and injury to compute the total utility loss. While the ex-ante utility loss for the average worker is small relative to the wage gain from rising exports, the ex-post utility loss is much larger for those who actually get injured or sick. David IntroductionIncreased job effort by workers may raise productivity and income both for those workers and the firms who employ them. But increased effort may come with a potential downside: putting in longer hours or working more intensively may endanger health. 1Sorting out the linkages between effort, productivity and health can be difficult. Healthier workers may be capable of working harder or longer hours, or conversely, "type A" individuals may desire to work harder and suffer health consequences, not as a result of work, but as a result of a comprehensively intensive approach to life. Working more intensively may also raise income and many studies show that higher income or wealth leads to better health (e.g. Marmot et al. 1991, Smith 1999, and Sullivan and von Wachter 2009. In contrast, Ruhm (2000)'s finding that the U.S. mortality rate is pro-cyclical suggests a competing channel: rising labor demand may lead to increased effort and so higher health risks. While the intellectual heritage of this effort channel can be traced back to Rosen (1986), its identification has remained elusive. Stevens, Miller, Page and Filipski (2015), for example, argue that Ruhm (2000)'s result for mortality is driven by staffing changes at nursing homes. 2In this paper we provide tight identification for the effort channel. Our matched worker-firm data allows us to look at changes in worker-level effort, injury and illness within job-spells, and changes in exporting activity provides a source of exogenous shocks to labor demand within the firm.We find that this increase in labor demand can be met by inducing workers to expand hours and increase work intensity, a potentially important adjustment mechanism that has been largely overlooked in the literature on globalization and labor markets (e.g. Verhoogen 2008, Autor, Dorn and Hanson 2013, and Hummels, Jørgensen, Munch and Xiang 2014, or HJMX 2014 3 . Taking this a step lin...

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“…These results provide direct evidence of changes in tariff policy affecting worker health at competing domestic establishments, and are, to our knowledge, the first results to do so. Our findings complement ongoing work by Hummels et al (2014) that looks at the worker injury effects of Danish exports.…”

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