Compensating wage differentials for fatal injury risk in Australia,Japan, and the United States

Our research infers the effects of institutionalized wage setting and lengthy worker-firm attachment by comparing estimated compensating wage differentials for fatal injury risk in Japanese, Australian, and U.S. manufacturing. Hedonic labor market equilibrium regressions for Japan reveal a statistically fragile compensating wage differential of 0% to 1.4% for exposure to the average fatality risk compared to employment in a perfectly safe workplace. Australian workers receive a statistically robust 2.5% estimated wage premium. Using new data on work-related fatalities, we find a 1% compensating wage differential in U.S. manufacturing that becomes more positive and statistically less significant as data are aggregated.     

Cigarette smoking,illicit drug use and the value of life

This article investigates the relationship between cigarette smoking and illicit drug use and compensating wage differentials for the risk of job-related death. Knowledge of an individual's experiences with cigarettes and illicit drugs is used to identify worker heterogeneity in job-risk preferences. The results show that individuals who are both nonsmokers and nondrug users work in the safest jobs and receive the highest compensating wage differentials for job-related risk. Significant differences in job risk and compensating differentials are also found between smokers and nonsmokers and drug users and nondrug users. Estimates of the statistical value of life increase from $2.9 million to $7.1 million when moving from the full sample of workers to those individuals classified as nonsmokers and non-drug users.     

Compensating wage differentials for workplace accidents: Evidence for union and nonunion workers in the UK

This article measures compensating wage differentials for job risks for union and nonunion workers. Job risk is made endogenous to avoid a selectivity bias arising if more able people choose safer jobs. We find that this adjustment has a considerable effect on the union group, raising their fatal risk premium above that of non union workers. This implies that there is more variation in unmeasured ability in the unionized group, and that job risk is an inferior good. The fact that unionized workers are also found in safer jobs might therefore be attributable to their greater wealth, rather than to greater“knowledge” in the unionized plant. The estimated statistical value of a life is £8.8 million in 1990 prices for union workers, with nonunion workers about 20% lower.     

The value of job safety for railroad workers

The value of reducing job risk is estimated using a hedonic wage model and a risk variable that is matched by occupation and state of residence. This study is the first to use the hedonic wage approach to estimate the value of safety in a single industry. Industry-specific estimates will help researchers and labor policymakers better understand the distribution of compensating wage differentials across industries. Our estimated value of job safety for railroad workers is between $21,000 and $26,000 (1980 dollars) per statistical disabling injury, which is somewhat larger than the average of values estimated in previous studies that use cross-industry or crossoccupation aggregate risk data.     

Collective bargaining levels,employment and wage inequality in Spain

After the increase in inequalities following the Great Recession, studies on wage bargaining systems have increasingly focused on wage inequality. This research examines wage inequality associated with collective bargaining levels in Spain, based on matched employer–employee microdata and quantile regression methods. These methods are applied across the wage distribution, following the method proposed by Firpo et al. (2011), to estimate wage premiums associated with agreement levels and to decompose the wage differentials observed at different points of the wage distribution. From the evidence obtained it can be concluded that, although the higher wages found in firm-level agreements are explained by the better observed characteristics of firms and workers covered by these collective agreements, there remains a positive wage premium. Although this premium is seen throughout the wage distribution, it favours mostly workers in the middle and upper-middle end. This slightly increases wage inequality in comparison with sectoral agreements. In contrast, workers without collective bargaining coverage generally suffer a wage penalty. This penalty is only observed on the left of the wage distribution. It becomes a significant wage premium in the upper end of the distribution, which implies a significant increase in wage inequality. In short, the evidence of this research suggests that reducing the coverage of collective bargaining could be associated with a significant increase in wage inequality. A better policy option for countries with a predominant sectoral model, such as Spain, would be to move towards an organized decentralization model. This would cause significant gains in employment as suggested by OECD (2019) and only a slight increase in wage inequality.     

Compensating Wage Differentials for Fatal and Nonfatal Injury Risk by Gender and Race

Our research examines risk compensation by gender and race using occupation, gender, and race specific fatal and nonfatal injury rates and a data set sufficiently large to produce accurate estimates across fairly narrow groups. The data provide strong evidence that men earn compensating differentials for both fatal and nonfatal injury risk and women earn compensating differentials for nonfatal injury risk. Female wage premiums for nonfatal injury risk exceed male wage premiums by a factor of more than three. Nonfatal injury risk compensation is widespread among the various demographic groups although largest for white women. Fatal injury risk compensation is more isolated with only white and Hispanic males earning significantly higher pay for greater amounts of fatal injury risk.     

Wage compensation for job-related illness: Evidence from a matched employer and employee survey in the UK

Despite voluminous studies on compensating wage differentials for job-related fatal or non-fatal injuries, there remain few published studies confirming the existence of compensating wage differentials for job-related illness. This study utilizes a recently completed UK employer-employee survey to look at this specific issue. I find there is strong evidence of wage compensation for job-related illness risk for both male and female employees in the UK. The estimated wage compensation for one job-related illness episode per year ranges from 27% to 140% of annual earnings depending on gender and estimation approaches.     

Dirty money: Is there a wage premium for working in a pollution intensive industry?

Within a compensating wage differential framework we investigate whether there is a wage premium for working in a pollution intensive industry. Our results for the economy as a whole suggest a small wage premium of approximately one quarter of one percent associated with the risk of working in a dirty job. This premium rises to over fifteen percent for those individuals who work in one of the five dirtiest industries. We also find evidence of a fatal risk wage premium, providing estimates of the value of a statistical life of between ￡12 million and ￡19 million (2000 prices).     

Racial Differences in Labor Market Values of a Statistical Life

This article constructs measures of job fatality rates for black and white workers using information on job-related fatalities from 1992–1997. The fatality rates for black employees are somewhat greater than those for whites. Each of these groups receives significant compensating wage differentials for fatality risks, controlling for nonfatal risks and expected workers' compensation benefits. The implicit value of a statistical life is lower for black workers than for whites. These results in conjunction with evidence that blacks receive less annual compensation for fatality risks than do whites imply that black and white workers face different market offer curves that are flatter for blacks than for whites.     

Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs

Due to unique institutional and technological factors, seasonal agricultural jobs are characterized by much higher risk of unemployment than similar permanent jobs. I estimate compensating differentials for risk of unemployment and compare those with unemployment insurance benefits provided by the government. I use two sets of estimators. First, I calculate parametric estimates with Heckman correction. Second, I compute three versions of a distribution-free semiparametric estimator which is robust to misspecification of the residual distribution. The main finding of the paper is that there exists a positive compensating differential of 15.5% of the average wage. This corresponds to an implicit replacement rate significantly larger than the typical unemployment benefit.     

Did We Overestimate the Value of Health?

Adam Smith's idea that wage differences reveal preferences for risk rests on strong theoretical foundations. This paper argues, however, that the dominant approach to identify compensating wage differentials—regressing individual wages on aggregate measures of risk—may lead to arbitrary estimates of these risk differentials. In a dataset with information on both, the incidence of illnesses or injuries across firms and industries, I calculate an implicit value of one injury or illness of about (1990) USD 18,800 pursuing the dominant approach. In contrast, regressing wages on the incidence of risk across firms produces a value of one injury or illness of about USD 11,300.     

The decomposition of regional wage differentials in Korea

This research note explains the wage differentials between the capital region and the non-capital region in Korea. It analyzes what proportions of the wage differential are due to differences in productivity-related labor characteristics and due to differences in how markets value the endowments of their workers. In a decomposition analysis, we find that approximately 26.9% of the wage differential is due to differences in productivity-related labor characteristics in the capital region. With respect to the endowments of the wage-determining characteristics, a substantial portion of the overall wage advantage of workers in the capital region can be explained by the higher average level of education. It is also found that the more detailed the occupational breakdown, the more of the wage differential that can be explained. These results suggest that the use of more detailed occupation classifications alleviates aggregation bias that may be a significant factor in coarser classification schemes.     

Pathways from workplace flexibility to turnover intention: Role of work–family conflict,family–work conflict,and job satisfaction

This study examined the prevalence of workplace flexibility and the mechanisms that allow workplace flexibility to influence turnover intentions through work–family and family–work conflicts and job satisfaction among low‐wage workers in South Korea. Participants included 250 low‐wage workers whose monthly salary was less than 2 million Korean won (approx. $1,900). The study results indicate that low‐wage workers have limited access to workplace flexibility and that workplace flexibility plays a significant protective role in reducing their turnover intention, indirectly by decreasing work–family conflicts and enhancing job satisfaction. This article also discusses the implications of these findings for labor policy and social work practice.     

Import competition, employment and wages in U.S. manufacturing

This paper uses cointegration analysis to examine if employment and wages in the U.S. manufacturing sector exhibit any long run relationship with import competition. While overall the cointegration analysis supports the results reported in Revenga’s (1992) panel study it indicates that in the long run a positive correlation between import price and employment and/or a negative correlation between import price and wage are sector sensitive. There is also a considerable variation in the magnitude of employment and wage elasticities.     

Valuing the risk of workplace sexual harassment

Using data on sexual harassment charges filed with the Equal Employment Opportunity Commission, I calculate the risk of sexual harassment by gender, industry, and age and establish that white females, but not nonwhite females, receive a compensating wage differential for exposure to a higher risk of sexual harassment. I use this risk premium to calculate the value of statistical harassment (VSH) in a manner analogous to the calculation of the value of statistical life (VSL). The VSH is around $7.6 million, about three-quarters of the size of the most-commonly cited levels of the VSL, and far above the maximum damages award for sexual harassment available under federal law. Boosting the maximum damages award to equal the VSH would create the appropriate economic incentives for organizations to deter sexual harassment.     

The heterogeneity of the value of statistical life: Introduction and overview

The refinement in worker fatality risk data used in hedonic wage studies and evidence from new stated preference studies have facilitated the exploration of the heterogeneity of the value of statistical life (VSL). Although the median VSL estimate for workers is $7–$7–8 million, the VSL varies considerably within the worker population. New estimates of the income elasticity of VSL are 1.0 or above, which are consistent with theoretical models linking VSL to the coefficient of relative risk aversion. The specific relationship between VSL and risk aversion is, however, more complex than previously understood. Age differences in VSL are substantial, with young children being accorded especially high VSL amounts. The public’s willingness to pay to reduce risks is reduced if those being protected are perceived as being blameworthy due to their responsibility for contributing to the risk.     

Moderate wage increases and flexible labour contracts to protect employment in Colombian manufacturing

Based on conditional and unconditional demands for labour, we exploit the variations of real minimum wage across manufacturing subsectors to present evidence that this variable affects formal employment. The long-term elasticity of labour demand to the minimum wage is around –0.7. Accordingly, increases in the minimum wage lead to job losses for unskilled labour, mainly in plants with fewer than 100; thus, small increases in the minimum wage are desirable to protect employment. Labour demand is highly cyclical: the output elasticity is about 1.7. Thus, some flexibility in labour contracts is desirable to reduce the link between employment and variation of plants’ sales. Open-ended labour contracts might allow reductions of the nominal wage rather than inducing job losses during periods of severe slumps, as has happened during the COVID-19 pandemic.     

Job Mobility and Early Career Wage Growth of White,African‐American,and Hispanic Women*

Objective. This article examines whether and how young women's job mobility influences racial and ethnic wage‐growth differentials during the first eight years after leaving school. Methods. We use the NLSY‐79 Work History File to simulate the influence of job mobility on the wages of skilled and unskilled workers. Results. African‐American and Hispanic women average less job mobility than white women, especially if they did not attend college. Unskilled women who experience frequent job changes during the first four postschool years reap positive wage returns, but turnover beyond the shopping period incurs wage penalties. Job mobility does not appear to boost wage growth for college‐educated women. Conclusions. Among unskilled women, race and ethnic wage disparities partly derive from group differences in the frequency of job changes, but unequal returns to job mobility drive the wage gaps for skilled women. We discuss several explanations for these disparities.     

Self Selection Bias in the Estimates of Compensating Differentials for Job Risks in India

This study contributes to the hedonic wage literature in developing countries by estimating the collective willingness to pay of a statistical life/injury, using an original data set from the Indian labor market. As self-selection by workers results in biased estimates of the wage premium for job risks, the study uses a modified selectivity bias correction technique. Empirical results indicate substantial heterogeneity in returns to risk. The estimated value of life without selectivity bias is Rs. 56 million (US $3 million), which is substantially larger than the value with selection bias. The estimates provided by the study can aid policy makers, international agencies and other researchers in evaluating health projects in India and other developing countries.