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Introduction Background on coal mining Model Data Results Discussion Productivity, Safety, and Regulation in Underground Coal Mining: Evidence from Disasters and Fatalities Gautam Gowrisankaran, Charles He, Eric A. Lutz, Jefferey L. Burgess University of Arizona, HEC Montreal, and NBER Amazon.com University of Arizona University of Arizona August 7, 2017 1 / 34

Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

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Page 1: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Productivity, Safety, and Regulation in Underground Coal Mining:Evidence from Disasters and Fatalities

Gautam Gowrisankaran, Charles He, Eric A. Lutz, Jefferey L. Burgess

University of Arizona, HEC Montreal, and NBER

Amazon.com

University of Arizona

University of Arizona

August 7, 2017

1 / 34

Page 2: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Introduction

Over the past several decades, U.S. regulatory state overseeingworker safety has grown more complex

E.g., for coal mining, the Mine Safety and Health Administration(MSHA) and several related laws enactedCreates complex structure which mines must follow

Despite regulation, accidents still commonplace for undergroundcoal mines

295 fatalities between 2000 and 2014

During this time period, coal mining productivity has declinedRegulations identified as a potential cause (Kuykendall andQureshi, 2014)

Productivity and safety both concerns for these minesUnderground coal mines produce both “coal” and “safety”Regulatory state may impose tradeoffs between them

2 / 34

Page 3: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Productivity and safety at underground coal mines

020

4060

80Ac

cide

nt ra

tes

01

23

45

Prod

uctiv

ity

2000q1 2005q1 2010q1 2015q1quarter

Productivity: tons of coal per worker hourSevere accidents: per 50 million hoursLess severe accidents: per 100,000 hours

3 / 34

Page 4: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Productivity and regulation at underground coal mines

0.5

11.

5Pe

nalti

es /

insp

ectio

ns

01

23

45

Prod

uctiv

ity

2000q1 2005q1 2010q1 2015q1quarter

Productivity: tons of coal per worker hourDollar penalties per worker hourInspection hours per hundred worker hours

Passage of MINER Act

4 / 34

Page 5: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Goals of paper

1 Does the regulatory state impose tradeoffs between productivityand safety?

What are the levels of the tradeoffs imposed by the regulatory statefor underground coal mining?

2 How do events such as mine disasters affect these tradeoffs?Provides insight into how regulatory state functions

3 To develop a new identification approach—of using shocks ofaccident costs—to understand tradeoffs imposed by regulation

Our identification approach may be applicable in other settings

5 / 34

Page 6: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Why should you care about our results?

Wide-ranging policy debate in recent years about burden of theregulatory state

Greenstone et al. (2012): environmental regulations lowerproductivity 4.8 percentCoffey et al. (2016): regulation lowers economic growth by 0.8percentage points annuallyMotivates recent EO by President Trump to limit regulations

Does regulatory state impose safety levels that equalize marginalbenefits with marginal costs of lost productivity?Underground coal mining is an important industry to consider

Sector employs over 45,000 workers in the U.S.Safety is one of the most important regulatory goals here

Study may also inform us about tradeoffs for other sectorsMany are at least as dangerous as underground coal miningE.g., fishing, logging, and roofing

6 / 34

Page 7: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Worker safety rules likely to be weakened

03/15/2017 9*18 AMWorker Safety Rules Are Among Those Under Fire in Trump Era - The New York Times

Page 1 sur 5https://www.nytimes.com/2017/03/13/business/us-worker-safety-rules-osha.html

https://nyti.ms/2mDf7QO

BUSINESS DAY

Worker Safety Rules Are Among ThoseUnder Fire in Trump EraBy BARRY MEIER and DANIELLE IVORY MARCH 13, 2017

Even as the Labor Department awaits confirmation of a new secretary, officials sayenforcement actions are moving forward against companies accused of violatingworkplace safety rules.

There is just one issue: The public isn’t likely to know much about them.

In a sharp break with the past, the department has stopped publicizing finesagainst companies. As of Monday, seven weeks after the inauguration of PresidentTrump, the department had yet to post a single news release about an enforcementfine.

By contrast, the Obama administration saw the announcements — essentiallypublicly shaming companies — as a major tool in its workplace safety enforcement.It issued an average of about 460 news releases annually about fines and otherenforcement actions, said Eric Conn, a lawyer in Washington who tracks suchcases.

“The reason you do news releases is to influence other employers” to clean uptheir acts, said David Michaels, who was an administrator of the Occupational

7 / 34

Page 8: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

West Virginia coal mine bill would curb safetyregulations

Updated 2000 GMT (0400 HKT) March 15, 2017By Kelly McCleary, CNN

Story highlights

West Virginia legislator wants to strip stateinvestigators of their ability to conductinspections

West Virginia led the nation in mining fatalitieslast year and has seen two deaths this year

Legislation would lower the number of times a mine inspector is required to examine facilities from fourtimes a year to once.

(CNN) — A state senator in West Virginia wants toeliminate enforcement of state mining regulations, amove union o9cials say could set back miners' safety bydecades.

Senate Bill 582 was introduced on Saturday by StateSen. Randy Smith. He proposes favoring federalstandards over state standards on issues like mineventilation, fire protection and accident investigations.

The legislation would strip state investigators of theirability to conduct inspections, instead tasking them with"compliance visits and education." If a safety violation is

discovered, investigators would issue "compliance assistance visit notices," instead of citations or fines.

West Virginia led the nation in mining fatalities last year, with four deaths, and has seen two deaths this year,according to the US Department of Labor Mine Safety & Health Administration.

West Virginia coal mine bill would curb safety rules - CNN.com http://edition.cnn.com/2017/03/15/us/west-virginia-coal-mining-sena...

1 sur 2 03/16/2017 6:49 PM

8 / 34

Page 9: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Idea of identification

We use a novel identification strategy and detailed panel dataPanel data record location, coal production, hours worked,accidents, regulatory inspections, etc.Still cannot credibly evaluate tradeoffs between safety andproductivity with a regression of accidents on productivity

Both are choice variables of firms, resulting in endogeneity biasI.e., firms with higher management quality may achieve feweraccidents and more productivitySimple strategies, such as mine fixed effects, unlikely to work

Our identification idea:We use disasters (near a mine) and fatalities (at a mine) asquasi-random shiftersIdea: these events raise the cost of future accidentsCause firms to make different choicesThis allows us to understand tradeoffs faced by firms

Formally, need:Disasters and fatalities to raise cost of future accidentsDisaster/fatality is mean independent from unobservables

9 / 34

Page 10: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Are our identifying assumptions valid?

Mines required to have systems in place to reduce severe risksNo fatality would be allowed to occur if it could be foreseen byworkers or management

Suggests validity of mean independence assumptionPerform falsification tests of future disaster/fatality

There are a number of plausible mechanisms through whichdisasters or fatalities might increase costs of future accidents

1 They can lead to widespread public outrage2010 Big Branch Mine disaster led President Obama to declare, in apublic eulogy, “owners responsible for conditions in the Upper BigBranch Mine should be held accountable”

Massey Energy CEO Donald Blankenship indicted in 2014

Might raise implicit costs of future accidents near minePublic attention following disaster concentrated near affected mine

2 They might change firm or worker perceptions regarding safety3 They might increase government inspections

10 / 34

Page 11: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Google trends index for “mining accident” in U.S. andstates with disasters

020

4060

8010

0Ra

te fo

r US

Jan04 Jan06 Jan08 Jan10 Jan12 Jan14Month

United States

020

4060

8010

0Ra

te fo

r KY

Jan04 Jan06 Jan08 Jan10 Jan12 Jan14Month

Kentucky

020

4060

8010

0Ra

te fo

r UT

Jan04 Jan06 Jan08 Jan10 Jan12 Jan14Month

Utah

020

4060

8010

0Ra

te fo

r WV

Jan04 Jan06 Jan08 Jan10 Jan12 Jan14Month

West Virginia

Kentucky Darby Mine disaster

Sago Minedisaster

Crandall Canyon Mine disaster

Upper Big Branch Mine disaster

11 / 34

Page 12: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Relation to literature

Our paper builds primarily on two literatures:A literature has investigated link between productivity and safety

Sider (1983) examines underground coal mining—our model buildson hisKniesner and Leeth (2004) examine whether MSHA enforcementreduces mine injuries, finding little effectBoomhower (2014) finds that increased liability regulations loweredproductivity and well blowouts for oil extractionHausman (2014) finds that electricity market restructuring allowednuclear power plants to operate both more safely and efficiently

Another literature considers impact of regulations on productivityStudies noted above (Greenstone et al., Coffey et al.)Gray (1987) finds safety regulations lowered productivityBridgman et al. (2006) finds productivity declines from regulationfor sugar beet manufacturing

This paper:Adds a new source of identificationQuantifies tradeoffs imposed by regulatory state

12 / 34

Page 13: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Remainder of talk

1 Background on coal mining

2 Model

3 Data

4 Results

5 Discussion

13 / 34

Page 14: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Study author on mine site visit

14 / 34

Page 15: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Historical fatalities in coal mining in U.S.0

12

34

5An

nual

fata

litie

s pe

r 1,0

00 m

iner

s

1900 1950 2000Year

15 / 34

Page 16: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Regulation and disasters in coal mining

Since 1900, over 100,000 workers killed in coal minesUnderground coal miners exposed to explosions, collapse,automotive accidents, etc.

In response to dangers of coal mining, significant regulatorystate enacted by U.S. government

Bureau of Mines, 1910Federal Coal Mine Safety Act of 1952Coal Mine Safety and Health Act “Coal Act” of 1969Mine Safety Act of 1977

The 1969 and 1977 Acts created the Mine Safety and HealthAdministration, MSHA

MINER Act of 2006Many regulations in response to a disaster

Federal Coal Mine Safety Act followed 1951 Orient #1 explosionCoal Act followed 1968 Consol #9 disaster, etc.

We primarily consider underground coal minesAll disasters for underground coal minesPresent some evidence for surface coal mines also

16 / 34

Page 17: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Model

Simple neoclassical model of coal extraction with safety concerns:Mine chooses two labor inputs:

Production labor lp and safety labor lsLeads to level of expected accidents and coal productionMine faced with wage w , price of coal p, and accident cost c

Production functions:Expected mineral output: f (lp)Expected accident rate per production worker: Ag(A) is per-worker safety input to achieve A, ls = s(A, lp) = lpg(A)

g(A) is monotonically decreasingHomogeneity of degree one in accidents

Expected profits for a mine are:

π(lp,A|c) = pf (lp)− clpA− w(lp + lpg(A))

FOCs:∂π(lp,A|c)

∂lp= pf ′(lp)− cA− w(1 + g(A))

∂π(lp,A|c)∂A

= −clp − wlpg′(A)

17 / 34

Page 18: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Implications of model

Proposition

Given regularity conditions on f (·) and g(·), the optimizing inputchoices l∗p (c) and A∗(c) are decreasing in c.

In words: when cost of accidents goes up, mines choose feweraccidents and lower production labor inputImplications:

Higher cost of accidents leads to more safety workersControlling for returns to scale, leads to lower productivity

18 / 34

Page 19: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Idea of estimation

Productivity in our model is:

Y =f (lp)

lp + s(A, lp)

Main identifying assumption:A disaster near a mine or a fatality at a mine raises c

We estimate tradeoffs between productivity and safety alongfrontier:

∂Y∂A

=∂Y∂c∂A∂c

Importantly, we identify tradeoffs between productivity and safetyknowing the presence, but not size, of cost shock

19 / 34

Page 20: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Estimation

We perform regressions of form:

Yit = αi + γt + β11{dit+1}+ β21{dit}+ β31{dit−1}+ β4Xit + εit

Unit of observation: mine/quarterαi : mine fixed effects; γt : quarterly dummies; Xit : other controlsdit : disaster near mine or fatality at mine (which raises c)Also have regressions with other dependent variables, e.g. Ait

All regressions have future fatalities or disastersFalsification test for hypothesis that disasters/fatalities raise cSignificance on these terms would allow us to reject modelInclude two years (not shown in equation for brevity)

Standard errors clustered at mine levelRegressions weighted by mean workers at mineMain regressions presented graphically here, with tables in paper

20 / 34

Page 21: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Datasets

Most of our data are from MSHA:Employment/Production Data Set (Quarterly)Accident Injuries Data SetInspections Data SetMines Data Set (for geographic locations)We keep coal mines with ≥ 2,000 person/hours per quarter (4full-time people)Datasets are publicly available for downloadData period: 2000-14, but have 2 years of lags and leads inestimation

Also have American Community Survey (ACS) data from IPUMSUse occupation of “coal mining”Examine number of “coal miners” and “managers” or “supervisors”Data are from 2005-13Only at state/year level

21 / 34

Page 22: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Summary statistics on accident occurrences in sample

Table: Underground coal mine accident occurrences in U.S.

Injury degree Accident Severe Numberdescription injury observed

Cases resulting in death 1 Yes 295Cases with permanent total or partial disability 2 Yes 550Cases with days away from work only 3 No 29,642Cases with days away from work and restricted work 4 No 2,534Cases with days of restricted work only 5 No 3,024Cases without days away from work but with medical treat-ment

6 No 14,166

Note: sample period is Q1:2000 through Q3:2014.

22 / 34

Page 23: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Fatalities and disasters in underground coal mines0

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3040

Num

ber o

f fat

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ear

2000 2005 2010 2015Year

2001 2006 2007 2010

Jim

Wal

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ig B

ranc

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ine,

WV

(29)

23 / 34

Page 24: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Summary statistics at mine-quarter level

Table: Summary statistics at mine-quarter level

Variable Mean Std. dev. Mean Min Maxwithin-mine

std. dev.Coal production (thousands of tons) 174.2 360.4 69.2 0 3,091Hours worked (thousands) 45.1 70.4 15.1 2 698Employees 78.4 119.4 24.3 2 1,164Productivity (tons per hour) 3.1 2.2 1.2 0 30Less-severe accidents per million hours 45.0 81.0 56.9 0 3,077Severe accidents per million hours 0.8 10.1 3.4 0 556Fatalities per million hours 0.3 6.5 1.3 0 467MSHA inspections 6.1 7.1 2.6 0 58MSHA inspection hours 278.7 322.4 125.9 0 8,526MSHA penalties (thousands of $) 22.3 70.0 32.9 0 1,982MSHA violations 28.3 36.6 18.0 0 470Note: summary statistics are for the estimation sample for underground mines for specifica-tions that have disasters as the main regressor. Sample period is Q1:2000 through Q3:2012.N=24,035. See text for details of sample construction and variable definitions.

24 / 34

Page 25: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

ACS data summary statistics

Table: ACS state-year level data summary statistics

Variable Obs. Mean Std. dev. Min MaxNumber of workers (thousands) 219 4.1 6.0 0.0 29.3Number of miners (thousands) 219 1.0 1.5 0.0 7.7Number of managers (thousands) 219 0.6 0.8 0.0 3.9Number of other workers (thousands) 219 2.6 3.8 0.0 19.2Mean income of workers (thousands of $) 219 61.0 24.4 11.1 253.8Mean income of miners (thousands of $) 171 53.2 19.0 0.8 165.5Mean income of managers (thousands of $) 179 87.7 39.2 0.0 301.0Mean income of other workers (thousands of $) 215 56.7 21.1 12.3 176.9Note: summary statistics are for the ACS data and extend from 2005 through 2013.

25 / 34

Page 26: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects of a disaster in state on productivity and safety

-20

-10

010

Perc

ent r

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ive

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ampl

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ean

-2 -1 (Quarter of) +1 +2Years relative to disaster

Productivity(tons per worker hour)

-40

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020

Perc

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Less-severe accidents(per million hours)

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050

Perc

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ean

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Severe accidents(per million hours)

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0Pe

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sam

ple

mea

n

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Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

26 / 34

Page 27: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects with quarterly (not annual) dummies

-20

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-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8Quarters relative to disaster

Productivity(tons per worker hour)

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Less-severe accidents(per million hours)

-200

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020

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-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8Quarters relative to disaster

Severe accidents(per million hours)

-400

-200

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ativ

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sam

ple

mea

n

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8Quarters relative to disaster

Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

27 / 34

Page 28: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects with cluster at state (not mine) level

-20

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Perc

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050

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Severe accidents(per million hours)

-200

-150

-100

-50

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to disaster

Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

28 / 34

Page 29: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects of a disaster on the number of coal miningworkers in state, by category

-50

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1001

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Number of managers(thousands)

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Number of miners(thousands)

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150

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Number of other workers(thousands)

Note: regressions use state-year level ACS data. Each box reports selected regressors from one regression and each dot is aregression coefficient expressed as a percent of the sample mean of the regressor. Dependent variables are indicated in thetitle. Each regression includes the following additional regressors: state fixed effects, year fixed effects, and logged state GDPper capita, and is weighted by the mean number of workers in the state. Standard errors are clustered at the state level. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

29 / 34

Page 30: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects of a disaster in state on MSHA activity

-40

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Number of inspections

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Inspection hours

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Total penalties

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-2 -1 (Quarter of) +1 +2Years relative to disaster

Number of violations

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

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Page 31: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects of a mine fatality on productivity and safety

-10

-50

510

15Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Productivity(tons per worker hour)

-40

-20

020

40Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Less-severe accidents(per million hours)

*

-50

050

1470

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to fatality

Severe accidents(per million hours)

*

-100

010

041

30Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Coefficients with an asterisk (?)are significant at the 1% level. Each regression includes the following additional regressors: mine fixed effects, quarter fixedeffects, state fixed effects interacted with hours worked, and state fixed effects interacted with number of employees, and isweighted by the mean number of workers at the mine. The vertical lines show 95% confidence intervals, based on standarderrors clustered at the mine level.

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Page 32: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Effects of a mine fatality on MSHA activity

-20

020

4060

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to fatality

Number of inspections

-20

020

4060

80Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Inspection hours

-100

010

020

030

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Total penalties

-50

050

100

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to fatality

Number of violations

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

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Page 33: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Robustness of results to alternative specifications1 Effect of disaster within 200KM on productivity and safety:

Results consistent with base results based on stateResults

2 Effect of disaster within 200KM with distance interactions:Disasters have more local impact on less-severe accidents than onproductivity or fatalities

Results

3 Long-run impact of a disaster in state:Second-year results consistent with base specificationWeak results that productivity drops in long-run

Results

4 Effect of a disaster in state on mine workers’ income in state(ACS data):

Not much impact on wagesResults

5 Fatalities at surface coal mines on MSHA inspections:Similar to underground coal mine inspection resultsResults for productivity and accidents on fatalities is weakerNo surface coal mine disasters to consider

Results

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Page 34: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Dollar magnitudes of impact following disaster in state

Reductions in fatalities:Use central “Value of statistical life” estimate of $6.5 millionReductions in fatalities in second year after nearby disasterequivalent to $1.63 per hourNegative-but-insignificant pre-trends suggest this is overstated

Reductions in less-severe accidents:National Safety Council estimates $30,000 costsReduction in second year after disaster of $0.24 per hour

Productivity drop:Disaster leads to 0.33 (11%) lower coal production per hourIf firms could hire workers at a total cost of $40 / hour, they wouldneed 11.9% more workers, adding $4.76 per hour workedWith production drop, at $50/ton coal price, this costs $16.5 / hour

Much higher costs than benefits following disaster:Conservatively, costs are 2.67 times monetized safety gainsNumber of factors suggest this ratio may be larger:

Long-run productivity declines following disasterNegative (though not significant) pre-trend on fatalitiesPossibility of lower production

34 / 34

Page 35: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Introduction Background on coal mining Model Data Results Discussion

Conclusions

Underground coal mining remains a dangerous sector whereregulatory state may make mines tradeoff production and safety

Mine regulation in this sector is substantial

Mine disasters nearby lead to large decreases in both accidentsand productivity

Falsification tests using pre-trends adds credibility to results

Smaller effects after mine fatalityRegulatory state appears to be imposing a substantialproductivity burden

Costs are 2.67 or more times greater than benefits following adisaster using published VSL numbers

Our approach to understanding benefits and costs of regulationmay be applicable to other sectors

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Page 36: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Disasters on productivity and safety within 200KM

-15

-10

-50

510

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to disaster

Productivity(tons per worker hour)

-30

-20

-10

010

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to disaster

Less-severe accidents(per million hours)

-150

-100

-50

050

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to disaster

Severe accidents(per million hours)

-300

-200

-100

010

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to disaster

Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

Back

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Page 37: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Disasters within 200KM with interactions

Productivity Less-severe Severe Fatalities(tons per accidents per accidents per per

worker hour) million hours million hours millions hours(Pre-trend coefficients in regression but omitted from table)

Quarter of disasterBase −0.24 −3.06 0.08 −0.35

(0.17) (5.66) (0.41) (0.35)Base×distance (100KM) 0.04 0.46 −0.25 0.10

(0.13) (3.46) (0.32) (0.22)

First year afterBase −0.11 −9.74∗ −0.32 −0.37

(0.15) (5.18) (0.26) (0.24)Base×distance (100KM) −0.09 4.23∗ −0.11 0.04

(0.11) (2.54) (0.11) (0.05)

Second year afterBase −0.32∗∗ −8.82∗∗ −0.48∗ −0.37∗

(0.14) (3.97) (0.27) (0.21)Base×distance (100KM) 0.03 4.23 0.03 0.09

(0.10) (2.57) (0.14) (0.07)

R2 within 0.22 0.05 0.01 0.01N 24,035 24,035 24,035 24,035

Back

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Page 38: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Disasters in state with long-run effects

-30

-20

-10

010

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2 >2Years relative to fatality

Productivity(tons per worker hour)

-40

-20

020

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2 >2Years relative to fatality

Less-severe accidents(per million hours)

-100

-50

050

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2 >2Years relative to fatality

Severe accidents(per million hours)

-300

-200

-100

010

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2 >2Years relative to fatality

Fatalities(per million hours)

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

Back

38 / 34

Page 39: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Effects of a disaster on the mean income of employedcoal mining workers in state, by category

-10

-50

510

Perc

ent r

elat

ive

to s

ampl

e m

ean

-1 (Year of) +1 +2Years relative to disaster

Mean income of workers(thousands)

-10

010

2030

Perc

ent r

elat

ive

to s

ampl

e m

ean

-1 (Year of) +1 +2Years relative to disaster

Mean income of managers(thousands)

-30

-20

-10

010

20Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-1 (Year of) +1 +2Years relative to disaster

Mean income of miners(thousands)

-15

-10

-50

5Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-1 (Year of) +1 +2Years relative to disaster

Mean income of other workers(thousands)

Note: regressions use state-year level ACS data. Each box reports selected regressors from one regression and each dot is aregression coefficient expressed as a percent of the sample mean of the regressor. Dependent variables are indicated in the title.Each regression includes the following additional regressors: state fixed effects, year fixed effects, and logged state GDP per capita,and is weighted by the mean number of workers in the state. Standard errors are clustered at the state level. The vertical lines show95% confidence intervals, based on standard errors clustered at the mine level.

Back

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Page 40: Productivity, Safety, and Regulation in Underground Coal ...gowrisan/...coal_mining_slides.pdf · Coal Mine Safety and Health Act “Coal Act” of 1969 Mine Safety Act of 1977 The

Results for surface mine fatalities

-50

050

100

150

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to fatality

Number of inspections

-100

010

020

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Inspection hours

-100

0-5

000

500

1000

Perc

ent r

elat

ive

to s

ampl

e m

ean

-2 -1 (Quarter of) +1 +2Years relative to fatality

Total penalties

-200

020

040

0Pe

rcen

t rel

ativ

e to

sam

ple

mea

n

-2 -1 (Quarter of) +1 +2Years relative to fatality

Number of violations

Note: each box reports selected regressors from one regression and each dot is a regression coefficient expressed as apercent of the sample mean of the regressor. Dependent variables are indicated in the titles. Each regression includes thefollowing additional regressors: mine fixed effects, quarter fixed effects, state fixed effects interacted with hours worked, andstate fixed effects interacted with number of employees, and is weighted by the mean number of workers at the mine. Thevertical lines show 95% confidence intervals, based on standard errors clustered at the mine level.

Back

40 / 34