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The impact of workers' compensation on wage premiums for job hazards

Author

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  • Ronald Meng
  • Douglas Smith

Abstract

The existence of a trade-off between occupational risk and earnings is well known. Most studies, however, ignore how public insurance systems, like workers' compensation (WC) affect this trade-off. This paper incorporates the workers' compensation system into a hedonic earnings function for paid employees. The results show that workers' compensation lowers the wage-risk trade-off for a sample of Ontario workers. In the absence of workers' compensation, employees would receive a significantly higher risk premium for exposure to the possibility of occupational injuries. This implies that labour markets will provide more than the socially optimal degree of risk if experience rating of workers' compensation is incomplete.

Suggested Citation

  • Ronald Meng & Douglas Smith, 1999. "The impact of workers' compensation on wage premiums for job hazards," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1101-1108.
    • Handle: RePEc:taf:applec:v:31:y:1999:i:9:p:1101-1108
    DOI: 10.1080/000368499323580
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    Citations

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    Cited by:

    1. Ose, Solveig Osborg, 2005. "Working conditions, compensation and absenteeism," Journal of Health Economics, Elsevier, vol. 24(1), pages 161-188, January.
    2. Agamoni Majumder & S. Madheswaran, 2020. "Compensation for Occupational Risk and Valuation of Statistical Life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(3), pages 967-989, June.
    3. 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.
    4. Alison Morantz, 2010. "Opting Out of Workers' Compensation in Texas: A Survey of Large, Multistate Nonsubscribers," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 197-238, National Bureau of Economic Research, Inc.
    5. 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.
    6. Henry A. Roman & James K. Hammitt & Tyra L. Walsh & David M. Stieb, 2012. "Expert Elicitation of the Value per Statistical Life in an Air Pollution Context," Risk Analysis, John Wiley & Sons, vol. 32(12), pages 2133-2151, December.
    7. Murray, John E. & Nilsson, Lars, 2007. "Accident risk compensation in late imperial Austria: Wage differentials and social insurance," Explorations in Economic History, Elsevier, vol. 44(4), pages 568-587, October.
    8. 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.
    9. W. Kip Viscusi & Clayton Masterman, 2017. "Anchoring biases in international estimates of the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 54(2), pages 103-128, April.

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