Regulation Enforcement

Abstract This paper compares the effectiveness of two mechanisms regulation enforcement: (1) frequency inspections and (2) penalties for violations. Threat effects increased inspection rates, rather than corrective upon receiving an or penalty, are focus analysis. Mining industry data from 2004–2009 used to analyze responses mines separate increases in citation regarding regulations safety standards. Mines did not improve response at ex-ante inspecting rates; however, significantly reduced accidents under when implemented those higher penalty rates. The identification strategy results a local average treatment effect that implies increasing rates current levels would likely increase social welfare. Results shown be robust bandwidth changes model specification. interpretation estimated context selection is analyzed. Robustness checks exploit staffing restrict similar samples treated non-treated mines, justifying representative.