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New risk rates, inter-industry differentials and the magnitude of VSL estimates

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  • Scotton Carol R.

    (Department of Economics, Knox College, Galesburg, IL 61401, USA)

Abstract

The Census of Fatal Occupational Injury (CFOI) provides data for creating objective measures of workplace risk used in estimations of wage-risk premia for value of statistical life (VSL) calculations. This relatively new data set enables a more theoretically defensible measure for use in hedonic wage equations. However, constructing these rates from the CFOI data necessarily involves creating an industry-occupation matrix defining the “jobs,” deciding whether or not to include the self-employed, and selecting a denominator. These choices in the construction of the risk measure alone, as shown here, result in variations of VSL estimates ranging from $8 million to $18 million. Further, risk measures based on the CFOI data, regardless of construction, are sensitive to simple changes in the specification for the hedonic wage equation. In particular, fixed effects describing the industry in which a worker is employed, as well as the worker’s occupation, are primary influences on the magnitude of the VSL estimates.

Suggested Citation

  • Scotton Carol R., 2013. "New risk rates, inter-industry differentials and the magnitude of VSL estimates," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(1), pages 39-80, March.
    • Handle: RePEc:bpj:jbcacn:v:4:y:2013:i:1:p:39-80:n:5
    DOI: 10.1515/jbca-2012-0015
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    More about this item

    Keywords

    compensating wages; hedonic wage model; inter-industry differentials; value of a statistical life; workplace fatalities; JEL codes: J17; J31; I1;
    All these keywords.

    JEL classification:

    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I1 - Health, Education, and Welfare - - Health

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