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Using Income Tax Changes to Identify the Value of a Statistical Life

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Author Info
David Powell ()
Abstract

This paper recognizes that compensating differentials are a function of the income tax rate, using this observation to introduce a methodology for estimating compensating differentials with a specific application to the value of a statistical life (VSL). When taxes change, the pre-tax wages of risky jobs should shift relative to the pre-tax wages of safe jobs in a manner proportional to the VSL. This approach controls for fixed effects without using industry-specific changes in risk as a source of identification. The strategy yields VSL estimates between $50 million and $75 million, an order of magnitude higher than the previous literature.

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File URL: http://www.rand.org/pubs/working_papers/2009/RAND_WR706.pdf
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Publisher Info
Paper provided by RAND Corporation Publications Department in its series Working Papers with number 706.

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Length: 51 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:ran:wpaper:706

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Related research
Keywords: income taxes; value of a statistical life; tax incidence;

Find related papers by JEL classification:
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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This page was last updated on 2009-11-12.

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