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Estimation of Wage–Risk Differentials Without Wages

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  • Donald F. Vitaliano

Abstract

Utilizing the duality properties of a production/profit function, this article estimates the risk premium received by Pennsylvania bituminous coal miners in 1915, without recourse to any information related to wages. A Cobb-Douglas coal production function is fitted to data for 694 mining establishments. Miners received modest risk compensation, expressed as the value of a statistical life (VSL), of US$6,020 for fatal injuries and US$3,550 for nonfatal accidents. Converted to current price and wage levels, the death risk VSL is roughly US$400,000—far below modern multi-million dollar life values for workplace risk. JEL Classifications : II0, JI7, J28, LII, L72

Suggested Citation

  • Donald F. Vitaliano, 2019. "Estimation of Wage–Risk Differentials Without Wages," The American Economist, Sage Publications, vol. 64(2), pages 188-196, October.
    • Handle: RePEc:sae:amerec:v:64:y:2019:i:2:p:188-196
    DOI: 10.1177/0569434519841065
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    References listed on IDEAS

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    1. Sider, Hal, 1983. "Safety and Productivity in Underground Coal Mining," The Review of Economics and Statistics, MIT Press, vol. 65(2), pages 225-233, May.
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    More about this item

    Keywords

    compensating differentials; value of a statistical life; production function; coal mining;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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