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Stability of Estimates of the Compensation for Danger

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Abstract

Estimates of the extra earnings for jobs with higher risks of death can be used in cost-benefit studies involving risk changes. Because of this use, the magnitude and stability of the estimated coefficient are important. Part of the current study closely reproduces a widely quoted 1982 study by Marin & Psacharopoulos to check on the stability. We also examine the robustness of the estimate to the inclusion/exclusion of non-fatal risks and other relevant characteristics. While the magnitude of the co-efficient has increased threefold from the earlier study, the coefficient is robust to other changes in the specification. There could be selectivity bias in the estimates of the extra return because people can select their occupation on the basis of its riskiness. Our findings suggest that one common technique to deal with selectivity bias in a continuous variable can give unreliable results in practice.

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  • A. Marin & G.R. Arabsheibani, 1998. "Stability of Estimates of the Compensation for Danger," Royal Holloway, University of London: Discussion Papers in Economics 98/15, Department of Economics, Royal Holloway University of London, revised Feb 1998.
    • Handle: RePEc:hol:holodi:9815
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    Cited by:

    1. Dionne, Georges & Lanoie, Paul, 2002. "How to make a public choice about the value of a statistical life: The case of road safety," Working Papers 02-2, HEC Montreal, Canada Research Chair in Risk Management.
    2. Jonathan Karnon & Aki Tsuchiya & Paul Dolan, 2005. "Developing a relativities approach to valuing the prevention of non‐fatal work‐related accidents and ill health," Health Economics, John Wiley & Sons, Ltd., vol. 14(11), pages 1103-1115, November.
    3. Beat Hintermann & Anna Alberini & Anil Markandya, 2010. "Estimating the value of safety with labour market data: are the results trustworthy?," Applied Economics, Taylor & Francis Journals, vol. 42(9), pages 1085-1100.
    4. 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.
    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. Spengler, Hannes, 2004. "Kompensatorische Lohndifferenziale und der Wert eines statistischen Lebens in Deutschland," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 37281, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    7. Nikolaos Georgantzis & Efi Vasileiou, 2014. "Are Dangerous Jobs Paid Better? European Evidence," Research in Labor Economics, in: New Analyses of Worker Well-Being, volume 38, pages 163-192, Emerald Group Publishing Limited.
    8. Anna Alberini, 2017. "Measuring the economic value of the effects of chemicals on ecological systems and human health," OECD Environment Working Papers 116, OECD Publishing.
    9. Ferreira, Susana & Martinez-de-Morentin, Sara & Erro-Garcés, Amaya, 2024. "Measuring Job Risks When Hedonic Wage Models Do Not Do the Job," IZA Discussion Papers 16716, Institute of Labor Economics (IZA).
    10. Spengler, Hannes, 2004. "Kompensatorische Lohndifferenziale und der Wert eines statistischen Lebens in Deutschland (Compensating wage differentials and the value of a statistical life in Germany)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(3), pages 269-305.
    11. Spengler, Hannes, 2004. "Kompensatorische Lohndifferenziale und der Wert eines statistischen Lebens in Deutschland," Darmstadt Discussion Papers in Economics 133, Darmstadt University of Technology, Department of Law and Economics.
    12. Anna Alberini, 2005. "What Is a Life Worth? Robustness of VSL Values from Contingent Valuation Surveys," Risk Analysis, John Wiley & Sons, vol. 25(4), pages 783-800, August.
    13. G. Dionne & P.-C. Michaud, 2002. "Statistical Analysis of Value-of Life estimates using Hedonic Wage Method," THEMA Working Papers 2002-13, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    14. Dora L. Costa & Matthew E. Kahn, 2004. "Changes in the Value of Life, 1940--1980," Journal of Risk and Uncertainty, Springer, vol. 29(2), pages 159-180, September.
    15. Spengler, Hannes, 2004. "Kompensatorische Lohndifferenziale und der Wert eines statistischen Lebens in Deutschland (Compensating wage differentials and the value of a statistical life in Germany)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(3), pages 269-305.
    16. Alberini, Anna & Chiabai, Aline, 2007. "Urban environmental health and sensitive populations: How much are the Italians willing to pay to reduce their risks?," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 239-258, March.
    17. Thomas DeLeire & Helen Levy, 2004. "Worker Sorting and the Risk of Death on the Job," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 925-954, October.
    18. Konstantinos, Pouliakas & Ioannis, Theodossiou, 2010. "An Inquiry Into the Theory, Causes and Consequences of Monitoring Indicators of Health and Safety At Work," MPRA Paper 20336, University Library of Munich, Germany.
    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. Sanam Khan & Faisal Jamil, 2021. "Income differentials in the police and taxation departments’ employees in Peshawar," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(5), pages 1815-1828, October.
    21. Zac Reynolds & Daehoon Nahm & Craig MacMillan, 2022. "Compensating Wage Differentials for Job Fatality and Injury Risk in Australia," The Economic Record, The Economic Society of Australia, vol. 98(321), pages 152-165, June.
    22. Matthew Cole & Robert Elliott & Joanne Lindley, 2009. "Dirty money: Is there a wage premium for working in a pollution intensive industry?," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 161-180, October.
    23. 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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    More about this item

    Keywords

    Cost-Benefit; Value of Life; Labour market; Selectivity bias;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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