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Worker Investments In Safety, Workplace Accidents, And Compensating Wage Differentials

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  • José R. Guardado
  • Nicolas R. Ziebarth

Abstract

The theory of compensating wage differentials (CWDs) assumes that firms supply and workers demand workplace safety, predicting a positive relationship between accident risk and wages. This article allows for safety provision by workers, which predicts a countervailing negative relationship between individual risk and wages: Firms pay higher wages for higher safety‐related productivity. Using National Longitudinal Survey of Youth panel data and data on fatal and nonfatal accidents, our precise CWDs imply a value of a statistical injury of $45.4 thousand and a value of a statistical life of $6.3 million. In line with our model, individual risk and wages are negatively correlated.

Suggested Citation

  • José R. Guardado & Nicolas R. Ziebarth, 2019. "Worker Investments In Safety, Workplace Accidents, And Compensating Wage Differentials," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(1), pages 133-155, February.
    • Handle: RePEc:wly:iecrev:v:60:y:2019:i:1:p:133-155
    DOI: 10.1111/iere.12347
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    Cited by:

    1. Yang, Siying & Liu, Fengshuo & Lu, Jingjing & He, Xiaogang, 2022. "Does occupational injury promote industrial robot applications?," Technology in Society, Elsevier, vol. 70(C).
    2. Bond, Timothy N. & Giuntella, Osea & Lonsky, Jakub, 2023. "Immigration and work schedules: Theory and evidence," European Economic Review, Elsevier, vol. 152(C).
    3. Park, R. Jisung & Pankratz, Nora & Behrer, A. Patrick, 2021. "Temperature, Workplace Safety, and Labor Market Inequality," IZA Discussion Papers 14560, Institute of Labor Economics (IZA).
    4. Strulik, Holger, 2022. "A health economic theory of occupational choice, aging, and longevity," Journal of Health Economics, Elsevier, vol. 82(C).
    5. Parro, Francisco & Pohl, R. Vincent, 2018. "Health Shocks, Human Capital, and Labor Market Outcomes," MPRA Paper 87238, University Library of Munich, Germany.
    6. Danielle Lamb & Rafael Gomez & Milad Moghaddas, 2022. "Unions and hazard pay for COVID‐19: Evidence from the Canadian Labour Force Survey," British Journal of Industrial Relations, London School of Economics, vol. 60(3), pages 606-634, September.
    7. Massimo Anelli & Felix Koenig, 2021. "Willingness to Pay for Workplace Safety," CESifo Working Paper Series 9469, CESifo.
    8. Jin, Lawrence & Ziebarth, Nicolas R., 2020. "Sleep, health, and human capital: Evidence from daylight saving time," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 174-192.
    9. Julianne E. Dunn & Joel Elvery, 2021. "Manufacturing Wage Premiums Have Diverged between Production and Nonproduction Workers," Cleveland Fed Regional Policy Report, Federal Reserve Bank of Cleveland, issue 20211109, pages 1-26, November.
    10. Gabriele Curci & Domenico Depalo & Alessandro Palma, 2023. "The Dirtier You Breathe, The Less Safe You Are. The Effect of Air Pollution on Work Accidents," CEIS Research Paper 554, Tor Vergata University, CEIS, revised 24 May 2023.
    11. 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.

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