Valuing Risk in the Workplace: Market Price, Willingness to Pay, and the Optimal Provision of Safety
Abstract
The theory of compensating wage differentials, attributable to Adam Smith, suggests that jobs with disagreeable characteristics will command high wages, ceteris paribus. Most empirical tests of this theory with hedonic wage equations implicitly assume that workers' willingness to pay for risk reduction (safety) in the workplace through diminished wages and market valuations of the "price" of these reductions are equivalent. It is shown that this is not the case within the manufacturing sector where willingness to pay exceeds the price (cost) of risk reduction at current levels of risk exposure. Implications for implied value of life estimates are also examined. Copyright 1990 by MIT Press.Download Info
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Bibliographic Info
Article provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 72 (1990)
Issue (Month): 3 (August)
Pages: 463-70
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Web page: http://mitpress.mit.edu/journals/
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Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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"Estimating the marginal willingness to pay for commuting,"
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0046, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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SIRE Discussion Papers
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- S. Madheswaran, 2007. "Measuring the value of statistical life: estimating compensating wage differentials among workers in India," Social Indicators Research, Springer, vol. 84(1), pages 83-96, October.
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Wisconsin-Madison Agricultural and Applied Economics Staff Papers
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- Van Ommeren, Jos & Fosgerau, Mogens, 2009.
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Elsevier, vol. 65(1), pages 38-47, January.
- van Ommeren, Jos & Fosgerau, Mogens, 2008. "Workers' marginal costs of commuting," MPRA Paper 12010, University Library of Munich, Germany.
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