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Obvious benefits of increased workplace safety

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Besides the obvious benefits of increased workplace safety, what are some of the economic effects of these worker protections?

Assume a competitive product market and a competitive labor market for lumber (tree-harvesting) in two different markets in California. In Northern California, the wage rate is $20/hr. But because temperatures are much higher in Southern California, the going wage rate is $25/hour.

Some lumberjacks are willing to endure higher temperatures in Southern California in exchange for a wage premium of $5/hr. Those that prefer more comfortable working conditions earn less but are willing to sacrifice the wage premium for more comfort.

Now suppose that the government mandates a workplace safety condition that requires lumberjacks to take a 20-minute break every hour when temperatures exceed 89 degrees F.

  1. What will be the effect of this rule on the relative wages of lumberjacks in Southern California compared to Northern California? What will be the effect on the non-monetary wages of Southern Californian lumberjacks? (assume lumberjacks can move between the two markets)
  2. From the point of view of Southern Californian lumberjacks, are they better or worse off as a result of this law?

How might this apply to other mandated benefits?

  1. How would mandated paid maternity leave affect the wages and labor market for women?

Reference no: EM133202936

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