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An Income Efficiency Model Approach to the Economic Consequences of Osha Cotton Dust Regulation

Author

Listed:
  • Ehsan H. Feroz

    (School of Business and Economics, University of Minnesota, Duluth, Minnesota 55812, USA.)

  • Raymond Raab

    (School of Business and Economics, University of Minnesota, Duluth, Minnesota 55812, USA.)

  • Stephen Haag

    (Information Technology and Electronic Commerce, University of Denver. Denver. CO 80208, USA.)

Abstract

This paper used Data Envelopment Analysis IDEA) to test the economic consequences of the Occupational Health and Safety Administration (OSHA) cotton dust standards by comparing the relative efficiency of firms affected by cotton dust in SIC 2200 and 2300 for the years before and after the Supreme Court upheld the regulation in 1981. Accounting-based inputs of common equity, total assets and production costs were minimized, while total revenue was maximized. Using available Compustat firms, we found that the surviving firms under stiff foreign competition had become more efficient during the post-regulatory period as predicted. The results indicate the usefulness of DEA as an alternative method of testing the economic consequences of a regulation.

Suggested Citation

  • Ehsan H. Feroz & Raymond Raab & Stephen Haag, 2001. "An Income Efficiency Model Approach to the Economic Consequences of Osha Cotton Dust Regulation," Australian Journal of Management, Australian School of Business, vol. 26(1), pages 69-89, June.
    • Handle: RePEc:sae:ausman:v:26:y:2001:i:1:p:69-89
    DOI: 10.1177/031289620102600105
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    References listed on IDEAS

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    1. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
    2. Hughes, John S & Magat, Wesley A & Ricks, William E, 1986. "The Economic Consequences of the OSHA Cotton Dust Standards: An Analysis of Stock Price Behavior," Journal of Law and Economics, University of Chicago Press, vol. 29(1), pages 29-59, April.
    3. Charnes, A. & Cooper, W. W. & Golany, B. & Seiford, L. & Stutz, J., 1985. "Foundations of data envelopment analysis for Pareto-Koopmans efficient empirical production functions," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 91-107.
    4. Charles Dufour & Paul Lanoie & Michel Patry, 1998. "Regulation and Productivity," Journal of Productivity Analysis, Springer, vol. 9(3), pages 233-247, March.
    5. Smith, P, 1990. "Data envelopment analysis applied to financial statements," Omega, Elsevier, vol. 18(2), pages 131-138.
    6. Bartel, Ann P & Thomas, Lacy Glenn, 1985. "Direct and Indirect Effects of Regulation: A New Look at OSHA's Impact," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 1-25, April.
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    Cited by:

    1. E H Feroz & S Kim & R L Raab, 2003. "Financial statement analysis: A data envelopment analysis approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(1), pages 48-58, January.
    2. Rosita Chong & Raihana Firdaus Seah Abdullah & Alex Anderson, 2009. "Survival-Ability Of Firm: Empirical Evidence From Malaysia," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 3(1), pages 133-145.

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