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The Direct Incidence of Product Liability on Wages

Author

Listed:
  • Friehe Tim

    (Public Economics Group, 9377 University of Marburg , Am Plan 2, 35037 Marburg, Germany)

  • Pham Cat Lam

    (Public Economics Group, 9377 University of Marburg , Am Plan 2, 35037 Marburg, Germany)

Abstract

This paper shows that changes in the product-liability regime influence workforce welfare via an adjustment of the wage resulting from firm-union bargaining. Shifting more losses to consumers increases (decreases) equilibrium wages when consumers underestimate (overestimate) product risk. We highlight an important yet unexplored link between product liability and worker welfare relevant to policy-making.

Suggested Citation

  • Friehe Tim & Pham Cat Lam, 2025. "The Direct Incidence of Product Liability on Wages," Review of Law & Economics, De Gruyter, vol. 21(1), pages 77-90.
    • Handle: RePEc:bpj:rlecon:v:21:y:2025:i:1:p:77-90:n:1005
    DOI: 10.1515/rle-2024-0120
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    More about this item

    Keywords

    product liability; unions; wages; safety; misperceptions;
    All these keywords.

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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