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Employer Monopsony Power Does Not Reduce the Value of a Statistical Life

Author

Listed:
  • Cramer, Robert J

    (Vanderbilt University)

  • Kniesner, Thomas J.

    (Claremont Graduate University)

  • Viscusi, W. Kip

    (Vanderbilt University)

Abstract

Although wage rates are lower when employers have monopsony power, we find that the value of a statistical life (VSL) is not reduced when labor markets are more concentrated. Because the estimated VSL is the product of the wage and the wage-risk tradeoff rate, a greater tradeoff rate in highly concentrated U.S. labor markets produces a larger VSL. The general relationship we find is robust with respect to different labor market data. Our results provide the first evidence contradicting policy-related concerns that the VSL is lower in monopsonistic labor markets.

Suggested Citation

  • Cramer, Robert J & Kniesner, Thomas J. & Viscusi, W. Kip, 2025. "Employer Monopsony Power Does Not Reduce the Value of a Statistical Life," IZA Discussion Papers 18173, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18173
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    References listed on IDEAS

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    1. Azar, José & Marinescu, Ioana & Steinbaum, Marshall & Taska, Bledi, 2020. "Concentration in US labor markets: Evidence from online vacancy data," Labour Economics, Elsevier, vol. 66(C).
    2. Joni Hersch & W. Kip Viscusi, 2010. "Immigrant Status and the Value of Statistical Life," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
    3. Efraim Benmelech & Nittai K. Bergman & Hyunseob Kim, 2022. "Strong Employers and Weak Employees: How Does Employer Concentration Affect Wages?," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 200-250.
    4. Viscusi, W Kip, 2003. "Racial Differences in Labor Market Values of a Statistical Life," Journal of Risk and Uncertainty, Springer, vol. 27(3), pages 239-256, December.
    5. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May.
    6. Cong Gian & Sumedha Gupta & Kosali Simon & Ryan Sullivan & Coady Wing, 2024. "Do workers undervalue COVID-19 risk? Evidence from wages and death certificate data," Journal of Risk and Uncertainty, Springer, vol. 69(3), pages 281-321, December.
    7. Kevin Rinz, 2022. "Labor Market Concentration, Earnings, and Inequality," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 251-283.
    8. Elena Prager & Matt Schmitt, 2021. "Employer Consolidation and Wages: Evidence from Hospitals," American Economic Review, American Economic Association, vol. 111(2), pages 397-427, February.
    9. Douglas A. Webber, 2022. "Labor Market Competition and Employment Adjustment over the Business Cycle," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 87-110.
    10. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
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    More about this item

    Keywords

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    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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