IDEAS home Printed from
   My bibliography  Save this article

Compensating Wage Differentials and the Duration of Wage Loss


  • Hamermesh, Daniel S
  • Wolfe, John R


A formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk. Using the Panel Study of Income Dynamics linked to industry data on injuries and unemployment, the authors find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment. The compensating differentials for risk of injury are larger for union than for nonunion workers, while those for cyclical unemployment are smaller for union workers. Copyright 1990 by University of Chicago Press.

Suggested Citation

  • Hamermesh, Daniel S & Wolfe, John R, 1990. "Compensating Wage Differentials and the Duration of Wage Loss," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 175-197, January.
  • Handle: RePEc:ucp:jlabec:v:8:y:1990:i:1:p:s175-97

    Download full text from publisher

    File URL:
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See for details.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    1. Duncan, Greg J & Holmlund, Bertil, 1983. "Was Adam Smith Right after All? Another Test of the Theory of Compensating Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 366-379, October.
    2. Craig A. Olson, 1981. "An Analysis of Wage Differentials Received by Workers on Dangerous Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 167-185.
    3. Michael Hurd, 1980. "A Compensation Measure of the Cost of Unemployment to the Unemployed," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 225-243.
    4. James D. Adams, 1985. "Permanent Differences in Unemployment and Permanent Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 100(1), pages 29-56.
    5. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    6. Butler, Richard J & Worrall, John D, 1983. "Workers' Compensation: Benefit and Injury Claims Rates in the Seventies," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 580-589, November.
    7. Robert S. Smith, 1979. "Compensating Wage Differentials and Public Policy: A Review," ILR Review, Cornell University, ILR School, vol. 32(3), pages 339-352, April.
    8. Topel, Robert H, 1984. "Equilibrium Earnings, Turnover, and Unemployment: New Evidence," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 500-522, October.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Dickie, Mark & Messman, Victoria L., 2004. "Parental altruism and the value of avoiding acute illness: are kids worth more than parents?," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1146-1174, November.
    2. Krueger, Alan B & Burton, John F, Jr, 1990. "The Employers' Costs of Workers' Compensation Insurance: Magnitudes, Determinants, and Public Policy," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 228-240, May.
    3. Olivier Godechot & Marc Gurgand, 2000. "Quand les salariés jugent leur salaire," Économie et Statistique, Programme National Persée, vol. 331(1), pages 3-24.
    4. José Varejão & Pedro Portugal, 2003. "Why Do Firms Use Fixed-Term Contracts?," CEF.UP Working Papers 0310, Universidade do Porto, Faculdade de Economia do Porto.
    5. Elliott, Robert F. & Sandy, Robert, 1998. "Adam Smith may have been right after all: A new approach to the analysis of compensating differentials," Economics Letters, Elsevier, vol. 59(1), pages 127-131, April.
    6. Daniel S. Hamermesh, 2009. "Grazing, Goods and Girth: Determinants and Effects," NBER Working Papers 15277, National Bureau of Economic Research, Inc.
    7. Jin-Tan Liu & Meng-Wen Tsou & Ping Wang, 2010. "Workforce Composition And Firm Productivity: Evidence From Taiwan," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 1032-1047, October.
    8. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1912-1946, December.
    9. 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.
    10. Claudio Lucifora & Dominique Meurs, 2006. "The Public Sector Pay Gap In France, Great Britain And Italy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 43-59, March.
    11. Agrawal, Ashwini K. & Matsa, David A., 2013. "Labor unemployment risk and corporate financing decisions," LSE Research Online Documents on Economics 69608, London School of Economics and Political Science, LSE Library.
    12. Dou, Yiwei & Khan, Mozaffar & Zou, Youli, 2016. "Labor unemployment insurance and earnings management," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 166-184.
    13. Juan A. Cañada Vicinay, 1997. "Les équations hédoniques de salaire et la perception subjective des conditions de travail," Économie et Prévision, Programme National Persée, vol. 131(5), pages 155-174.
    14. Agrawal, Ashwini K. & Matsa, David A., 2013. "Labor unemployment risk and corporate financing decisions," Journal of Financial Economics, Elsevier, vol. 108(2), pages 449-470.
    15. Emilia Del Bono & Andrea Weber, 2008. "Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria," Journal of Labor Economics, University of Chicago Press, vol. 26, pages 181-221.
    16. repec:eee:soceco:v:69:y:2017:i:c:p:50-60 is not listed on IDEAS
    17. Assaad, Ragui & Tunali, Insan, 2002. "Wage formation and recurrent unemployment," Labour Economics, Elsevier, vol. 9(1), pages 17-61, February.
    18. Daniel S. Hamermesh, 1997. "Immigration and the Quality of Jobs," NBER Working Papers 6195, National Bureau of Economic Research, Inc.
    19. Carpenter, Jeffrey, 2016. "The labor supply of fixed-wage workers: Estimates from a real effort experiment," European Economic Review, Elsevier, vol. 89(C), pages 85-95.
    20. Ragui Assaad & Insan Tunali, 2000. "Wage Formation and Recurrent Unemployment," Working Papers 2016, Economic Research Forum, revised 06 Aug 2000.
    21. Wolfgang Nagl, 2014. "Lohnrisiko und Altersarmut im Sozialstaat," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 54, April.
    22. Carpenter, Jeffrey & Hans Matthews, Peter & Robbett, Andrea, 2017. "Compensating differentials in experimental labor markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 50-60.
    23. John R. Graham & Hyunseob Kim & Si Li & Jiaping Qiu, 2013. "Human Capital Loss In Corporate Bankruptcy," Working Papers 13-37, Center for Economic Studies, U.S. Census Bureau.
    24. Hanka, Gordon, 1998. "Debt and the terms of employment," Journal of Financial Economics, Elsevier, vol. 48(3), pages 245-282, June.
    25. Hamermesh, Daniel S., 2010. "Incentives, time use and BMI: The roles of eating, grazing and goods," Economics & Human Biology, Elsevier, vol. 8(1), pages 2-15, March.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:8:y:1990:i:1:p:s175-97. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.