Skill and the Value of Life
The value of statistical life (VSL) can be inferred through real-world wagefatality risk trade-offs made across different occupations. This paper shows that the VSL based on the wage-risk trade-off tends to be biased upward if it does not account for the diversity of workers' unobservable skill to cope privately with job risk. This upward bias arises because the highest required wage differential among the workers is divided by their average risk across the population.
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"Risk, Self-Protection, and Ex Ante Economic Value,"
Center for Agricultural and Rural Development (CARD) Publications
90-wp57, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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