IRSST - Institut de recherche Robert-Sauvé en santé et en sécurité du travail

The costs of occupational injuries: a literature review


This literature review falls within the institute's interest in developing occupational health and safety economic indicators on which to base its choice of research priorities, as a complement to the indicators and other information already used at the IRSST.

The aim of this report is to identify, define and classify the components of the costs of occupational injuries, as well as to document the different economic approaches that are used to estimate the costs of occupational injuries. Therefore, this report does not aim to document the actual or estimated costs of occupational injuries that are found in the literature.

Occupational injury costs can be divided into three categories: direct costs, indirect costs, and human costs. There is no consensus regarding the composition of these costs. Generally, direct costs consist of aspects associated with treatment and "repair" of the injury, such as medical costs, and are usually rather easy to obtain and do not require the use of specific methods. Indirect costs are considered instead as being those related to the lost opportunities for the injured employee, the employer, coworkers and the community. They consist mainly of salary, administrative and lost-productivity costs. Compared to direct costs, indirect costs are usually more difficult to measure and rarely insured. Human costs are essentially based on the value of the change in the quality of life of the worker and the surrounding people.

In the literature, the human capital method is by far the most common method for estimating indirect costs. It consists of using salary as the measurement of a worker's contribution to the company. This method has the quality of using reliable data, and of being relatively easy to apply and simple to understand.

To estimate human costs, a willingness to pay is the favoured method of economists. This method consists of estimating the amount that an individual or a company is ready to pay to reduce his/its exposure to the risk. The estimates obtained using this method include aspects of both indirect costs and human costs. Studies that favour this method obtain significantly higher amounts than what is obtained using the human capital method, which indicates that the human costs would be very significant. Willingness to pay is, however, based on very restrictive assumptions and is difficult to apply.

The objective underlying the estimation of costs of occupational injuries and data availability are aspects that will impact the choice of method to be used and the cost aspects to be considered. Furthermore, a complete estimation of the cost of occupational injuries is not necessary in all cases. What is important is to use a cost estimation method that will provide sufficiently reliable results to allow decisions to be made.

Additional Information

Category: Research Report
Research Project: 0099-8560
Online since: January 11, 2011
Format: Text