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Compensating Differentials for Dangerous Work in a Labour Discipline Model
Author(s) -
Dorman Peter
Publication year - 1998
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00058
Subject(s) - economics , wage , dismissal , ceteris paribus , economic rent , work (physics) , labour economics , compensation (psychology) , function (biology) , production (economics) , production function , microeconomics , engineering , mechanical engineering , psychology , evolutionary biology , political science , psychoanalysis , law , biology
Wage compensation for occupational risk in Walrasian models has three properties: it generates efficient levels and allocations of risk, it enables workers in dangerous jobs to be just as well off, ceteris paribus, as workers in safe jobs, and it permits the estimation of willingness to pay schedules for safety from labour market data. This paper tests the status of these three properties under a simple model in which variable labour effort is induced by wage–safety rents and the threat of dismissal. It finds that all three must be modified, and that these results are robust over alternative specifications of labour market structure, the cost of providing safety, and the specification of the production function. The implications of this analysis are considered for both public policy questions and the interpretation of wage–risk studies.