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Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards? Earnings Premiums and Cancer Risks

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  • Lott, John R, Jr
  • Manning, Richard L

Abstract

During the last couple of decades, courts have intervened in employment relationships by allowing employees to circumvent the workers' compensation liability restrictions. Recent papers point to firms' divesting themselves of operations whose employees handled dangerous substances as a way of protecting themselves from these new liabilities. These actions supposedly prevent their workers from being justly compensated. We show that the central legal premise behind this argument is wrong. Firms cannot expose workers to hazards and then eliminate this liability by divesting or shutting down the hazardous operation. This paper also shows that workers were already being well compensated for carcinogenic exposures even before courts started allowing workers to collect large damages for occupational illnesses. Instituting the new liability rules also coincided with a large drop in earnings premiums. The large premiums imply that workers who received court awards were essentially compensated twice for their misfortune. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Lott, John R, Jr & Manning, Richard L, 2000. "Have Changing Liability Rules Compensated Workers Twice for Occupational Hazards? Earnings Premiums and Cancer Risks," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 99-130, January.
  • Handle: RePEc:ucp:jlstud:v:29:y:2000:i:1:p:99-130
    DOI: 10.1086/468065
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    Cited by:

    1. Bellavance, Franois & Dionne, Georges & Lebeau, Martin, 2009. "The value of a statistical life: A meta-analysis with a mixed effects regression model," Journal of Health Economics, Elsevier, vol. 28(2), pages 444-464, March.
    2. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    3. Thomas DeLeire & Shakeeb Khan & Christopher Timmins, 2013. "Roy Model Sorting And Nonrandom Selection In The Valuation Of A Statistical Life," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 279-306, February.
    4. Magdalena Flatscher-Thöni & Andrea M. Leiter & Hannes Winner, 2019. "Are Pain and Suffering Awards (Un-)Predictable? Evidence from Germany," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 199-219, September.
    5. Dionne, Georges & Lebeau, Martin, 2010. "Le calcul de la valeur statistique d’une vie humaine," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(4), pages 487-530, décembre.
    6. Leiter, Andrea & Thöni, Magdalena & Winner, Hannes, 2012. "Evaluating human life using court decisions on damages for pain and suffering," International Review of Law and Economics, Elsevier, vol. 32(1), pages 119-128.
    7. Magdalena Flatscher‐Thöni & Andrea M. Leiter & Hannes Winner, 2013. "Pricing Damages for Pain and Suffering in Court: The Impact of the Valuation Method," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 10(1), pages 104-119, March.
    8. Robert Sandy & Robert F. Elliott, 2005. "Long-term Illness and Wages: The Impact of the Risk of Occupationally Related Long-term Illness on Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 40(3).
    9. Matthew Cole & Robert Elliott & Joanne Lindley, 2009. "Dirty money: Is there a wage premium for working in a pollution intensive industry?," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 161-180, October.

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