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M. Kerndler:
"Occupational safety in a frictional labor market";
Report for ECON WPS - Working Papers in Economic Theory and Policy; 2021; 23 pages.

This paper studies the provision of occupational safety when the labor market is subject
to search frictions, and the safety level is determined endogenously. While safety measures
are costly for firms, they lower workers´ mortality. We show that the presence of search frictions leads to excess mortality compared to a frictionless labor market. In a decentralized
setting where wages and safety levels are bargained at the firm level, matching externalities
and a labor supply externality may lead to further increases in mortality. We obtain conditions under which these externalities are internalized by firms and workers, and discuss the
role of policy for promoting occupational safety

https://publik.tuwien.ac.at/files/publik_298652.pdf