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Work-related fatality risks and neoclassical compensating wage differentials

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  • Kevin Purse

Abstract

Neoclassical theory claims that wage differentials are paid to compensate workers for the risks of work-related injury and death. Empirical support for the claim is based on findings from econometric studies over three decades. This paper reviews the neoclassical case for compensating wage differentials. The focus is on studies which examine the theory as it applies to the risk of traumatic work-related death, since this is where the evidence for the theory is thought to be strongest. Much of the empirical support is found to be flawed. This is due to data limitations, difficulties in constructing the risk variable and, more particularly, problems with omitted variables which result in risk premia being conflated with inter-industry wage differentials. It is concluded that the neoclassical theory underpinning the econometric literature is also deficient and inhibits a realistic understanding of the production and distribution of work-related health and safety risks. Copyright 2004, Oxford University Press.

Suggested Citation

  • Kevin Purse, 2004. "Work-related fatality risks and neoclassical compensating wage differentials," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(4), pages 597-617, July.
    • Handle: RePEc:oup:cambje:v:28:y:2004:i:4:p:597-617
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    File URL: http://hdl.handle.net/10.1093/cje/beh024
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    Cited by:

    1. Nikolaos Georgantzis & Efi Vasileiou, 2014. "Are Dangerous Jobs Paid Better? European Evidence," Research in Labor Economics, in: New Analyses of Worker Well-Being, volume 38, pages 163-192, Emerald Group Publishing Limited.
    2. Drakopoulos, Stavros A. & Theodossiou, Ioannis, 2011. "Workers’ Risk Underestimation and Occupational Health and Safety Regulation," MPRA Paper 29643, University Library of Munich, Germany.
    3. Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
    4. Marko Ledić & Ivica Rubil, 2021. "Beyond Wage Gap, Towards Job Quality Gap: The Role of Inter-Group Differences in Wages, Non-Wage Job Dimensions, and Preferences," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(2), pages 523-561, June.
    5. repec:zbw:rwirep:0047 is not listed on IDEAS
    6. Franck Bailly & François-Xavier Devetter & François Horn, 2012. "Est-il possible d'améliorer les conditions de travail et d'emploi dans le secteur des services à la personne ? Une analyse en termes de mondes de production," Post-Print halshs-00805678, HAL.
    7. John P. Haisken-DeNew & Matthias Vorell, 2008. "Blood Money: Incentives for Violence in NHL Hockey," Ruhr Economic Papers 0047, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Peter Anderson, 2021. "Unions and compensating wage differentials for workplace accident risk: the English and Welsh railway industry, 1902–12," Economic History Review, Economic History Society, vol. 74(4), pages 1006-1030, November.
    9. Xiaoqi Guo & James Hammitt, 2009. "Compensating Wage Differentials with Unemployment: Evidence from China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(2), pages 187-209, February.
    10. Haisken-DeNew, John P. & Vorell, Matthias, 2008. "Blood Money: Incentives for Violence in NHL Hockey," Ruhr Economic Papers 47, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Oliver Denk, 2015. "Financial sector pay and labour income inequality: Evidence from Europe," OECD Economics Department Working Papers 1225, OECD Publishing.
    12. Rafael Muñoz de Bustillo & Enrique Fernández-Macías & José-Ignacio Antón & Fernando Esteve, 2011. "Measuring More than Money," Books, Edward Elgar Publishing, number 14072.
    13. Marcel GARZ, 2013. "Employment and wages in Germany since the 2004 deregulation of the temporary agency industry," International Labour Review, International Labour Organization, vol. 152(2), pages 307-326, June.
    14. Keith A. Bender & Hosne Mridha, 2011. "The Effect of Local Area Unemployment on Compensating Wage Differentials for Injury Risk," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 287-307, October.

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