TITLE:
Determination of Optimum Levels of Occupational Health and Safety in a Setting with Informal and Formal Sectors
AUTHORS:
Dincer Dedeoglu, Caglar Yurtseven
KEYWORDS:
Occupational Health and Safety, Economic Value of Life, Informal Sector, Developing Countries
JOURNAL NAME:
Modern Economy,
Vol.7 No.2,
February
24,
2016
ABSTRACT: In this paper, we aim to understand the determination of the optimum
levels of occupational health and safety in a setting where firms have the
outside option of working in the informal sector. We construct a theoretical
model in which equilibrium labor cost is exogenous and firms have an option to
decide to work in the high efficiency formal or low cost informal sector, where
there is a risk of detection and zero profit if they choose to work informally.
Considering the existence of a large informal sector in many developing
countries, the findings of this study are of great importance.