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Randomized Safety Inspections And Risk Exposure On The Job: Quasi-Experimental Estimates Of The Value Of A Statistical Life

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  • Jonathan M. Lee
  • Laura O. Taylor
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    Abstract

    Compensating wages for workplace fatality and accident risks are used to infer the value of a statistical life (VSL), which in turn is used to assess the benefits of human health and safety regulations. The estimation of these wage differentials, however, has been plagued by measurement error and omitted variables. This paper employs the first quasi-experimental design within a labor market setting to overcome such limitations in the ex-tant literature. Specifically, randomly assigned, exogenous federal safety inspections are used to instrument for plant-level risks and combined with confidential U.S. Census data on manufacturing employment to estimate the VSL using a difference-in-differences framework. The VSL is estimated to be between $2 and $4 million ($2011), suggesting prior studies may substantially overstate the value workers place on safety, and therefore, the benefits of health and safety regulations.

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    File URL: ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-05.pdf
    File Function: First version, 2014
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    Bibliographic Info

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 14-05.

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    Length: 51 pages
    Date of creation: Jan 2014
    Date of revision:
    Handle: RePEc:cen:wpaper:14-05

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    Related research

    Keywords: value of a statistical life; hedonic wage models; OSHA; quasi-experiment;

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    1. Scotton, Carol R. & Taylor, Laura O., 2011. "Valuing risk reductions: Incorporating risk heterogeneity into a revealed preference framework," Resource and Energy Economics, Elsevier, Elsevier, vol. 33(2), pages 381-397, May.
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    4. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
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    7. Lisa A. Robinson, 2007. "Policy Monitor How US Government Agencies Value Mortality Risk Reductions," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 1(2), pages 283-299, Summer.
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    13. Mary Evans & V. Kerry Smith, 2008. "Complementarity and the Measurement of Individual Risk Tradeoffs: Accounting for Quantity and Quality of Life Effects," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 41(3), pages 381-400, November.
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    21. Evans, Mary F. & Schaur, Georg, 2010. "A quantile estimation approach to identify income and age variation in the value of a statistical life," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 260-270, May.
    22. Ikuho Kochi & Bryan Hubbell & Randall Kramer, 2006. "An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 34(3), pages 385-406, July.
    23. Scholz, John T & Gray, Wayne B, 1990. " OSHA Enforcement and Workplace Injuries: A Behavioral Approach to Risk Assessment," Journal of Risk and Uncertainty, Springer, Springer, vol. 3(3), pages 283-305, September.
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    25. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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