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Estimating the value of safety with labour market data: Are the results trustworthy?
JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift)
ID 413778
Author(s) Hintermann, Beat; Alberini, Anna; Markandya, Anil
Author(s) at UniBasel Hintermann, Beat
Year 2010
Title Estimating the value of safety with labour market data: Are the results trustworthy?
Journal Applied economics
Volume 42
Number 9
Pages / Article-Number 1085-1100
Keywords Value of life, labor market, wage hedonics

We use a panel dataset of UK workers to look for evidence of compensating wage differentials for workplace risk, combined with risk data at the four-digit industry level.† We discuss various econometric problems associated with the hedonic wage approach, namely the instability of the estimates to specification changes, unobserved heterogeneity, and endogeneity. We find evidence of significant compensating wage differentials and VSL figures only under the most restrictive assumptions, i.e. when we assume that there is no unobserved heterogeneity and that all regressors are exogenous. However, the VSL values are large and vary dramatically with the inclusion or exclusion of industry and/or occupation dummies, as well as with the addition of nonfatal risk.† When we specify models that allow for heterogeneity and endogeneity of risk and of other regressors, we find no evidence of compensating wage differentials.† We conclude that if compensating differentials for risk exist, econometric problems and the changing nature of labor markets prevent us from observing them. We also conclude that models and techniques for panel data that account for unobserved heterogeneity and endogeneity present a completely different picture about compensating wage differentials than that inferred by most wage-risk studies, which have generally used single cross sections of data.

Publisher Routledge
ISSN/ISBN 1466-4283
Full Text on edoc Available
Digital Object Identifier DOI 10.1080/00036840802260940
ISI-Number WOS:000277439800003
Document type (ISI) Article

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