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An Analysis of Wage Differentials Received by Workers on Dangerous Jobs

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  • Craig A. Olson

Abstract

This study examines the wage differentials received by workers on hazardous jobs. The hypothesis that workers are compensated for the risk of experiencing a nonfatal or fatal accident was confirmed using BLS industry accident rates and a sample of full-time workers. The estimated value of a life at the average risk level for the sample implied by the estimated risk premium was about $3.2 million. However, the estimated value of a life declined as risk increased. This was explained by the fact that individuals found on riskier jobs are collectively less risk averse than individuals on safer jobs. An important interaction was also found between fatal accident risk and union status. Compared to nonunion workers, union members received substantially higher fatal accident premiums. These premiums imply that union members collectively place a higher value on life. Various explanations for this difference are discussed.

Suggested Citation

  • 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.
  • Handle: RePEc:uwp:jhriss:v:16:y:1981:i:2:p:167-185
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    Cited by:

    1. Ábrahám, Árpád & Kaderják, Péter & Pál, Gabriella, 2005. "A csökkenő halálozási és baleseti kockázat közgazdasági értéke Magyarországon. Egy munkaerő-piaci elemzés eredményei
      [The economic value of falling risk of death and accident in Hungary. Findings o
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 231-248.
    2. Thomas Kniesner & W. Viscusi & James Ziliak, 2010. "Policy relevant heterogeneity in the value of statistical life: New evidence from panel data quantile regressions," Journal of Risk and Uncertainty, Springer, vol. 40(1), pages 15-31, February.
    3. G. Dionne & P. Lanoie, 2002. "How to Make a Public Choice about the Value of a Statistical Life : The Case of Road Safety," THEMA Working Papers 2002-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Muhammad Rafiq & Mir Kalan Shah, 2010. "The Value of Reduced Risk of Injury and Deaths in Pakistan—Using Actual and Perceived Risk Estimates," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 823-837.
    5. S. Madheswaran, 2008. "Measuring the Value of Life and Limb: Estimating Compensating Wage Differentials Among Workers in Chennai and Mumbai," Working Papers id:1708, eSocialSciences.
    6. 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.
    7. 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.
    8. S. Madheswaran, 2007. "Measuring the value of statistical life: estimating compensating wage differentials among workers in India," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 84(1), pages 83-96, October.
    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. 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.
    11. R. A. Meng & Douglas A. Smith, 1990. "The Valuation of Risk of Death in Public Sector Decision-Making," Canadian Public Policy, University of Toronto Press, vol. 16(2), pages 137-144, June.
    12. Arline T. Geronimus & John Bound & Lisa J. Neidert, 1995. "On the Validity of Using Census Geocode Characteristics to Proxy Individual Socioeconomic Characteristics," NBER Technical Working Papers 0189, National Bureau of Economic Research, Inc.
    13. Titus J. Galama & Hans van Kippersluis, 2010. "A Theory of Socioeconomic Disparities in Health over the Life Cycle," Tinbergen Institute Discussion Papers 10-079/3, Tinbergen Institute.
    14. Canyon Bosler & Mary C. Daly & John G. Fernald & Bart Hobijn, 2017. "The Outlook for U.S. Labor-Quality Growth," NBER Chapters,in: Education, Skills, and Technical Change: Implications for Future US GDP Growth National Bureau of Economic Research, Inc.
    15. 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.
    16. William T. Dickens & Brian A. Ross, 1984. "Consistent Estimation Using Data From More Than One Sample," NBER Technical Working Papers 0033, National Bureau of Economic Research, Inc.
    17. Theresa M. Glomb & John D. Kammeyer-Mueller & Maria Rotundo, "undated". "Emotional Labor Demands and Compensating Wage Differentials," Working Papers 0802, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
    18. repec:eee:labchp:v:1:y:1986:i:c:p:641-692 is not listed on IDEAS
    19. Courard-Hauri David & Lauer Stephen A., 2012. "Taking "All Men Are Created Equal" Seriously: Toward a Metric for the Intergroup Comparison of Utility Functions Through Life Values," Journal of Benefit-Cost Analysis, De Gruyter, vol. 3(3), pages 1-30, August.
    20. Ronald G. Ehrenberg, 1985. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc.
    21. Robin L. Bartlett & James H. Grant & Timothy I. Miller, 1990. "Personality Differences and Executive Compensation," Eastern Economic Journal, Eastern Economic Association, vol. 16(3), pages 187-195, Jul-Sep.
    22. W. Kip Viscusi, 2015. "The heterogeneity of the value of statistical life: evidence and policy implications," Chapters,in: Benefit–Cost Analyses for Security Policies, chapter 4, pages 78-116 Edward Elgar Publishing.
    23. repec:eee:labchp:v:2:y:1986:i:c:p:1139-1181 is not listed on IDEAS
    24. Riddel, Mary, 2011. "Uncertainty and measurement error in welfare models for risk changes," Journal of Environmental Economics and Management, Elsevier, vol. 61(3), pages 341-354, May.
    25. Avner Ben-Ner & Yong-Seung Park, "undated". "Duration of Non-Work Spells in the Workers' Compensation Insurance System: Unionized vs. Non-Unionized Workers," Working Papers 1202, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).

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