WORKER INVESTMENTS IN SAFETY, WORKPLACE ACCIDENTS, AND COMPENSATING WAGE DIFFERENTIALS | Zendy

Guardado José R. | Zendy; Ziebarth Nicolas R. | Zendy

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WORKER INVESTMENTS IN SAFETY, WORKPLACE ACCIDENTS, AND COMPENSATING WAGE DIFFERENTIALS

Author(s) -

Guardado José R.,

Ziebarth Nicolas R.

Publication year - 2019

Publication title -

international economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 2.658

H-Index - 86

eISSN - 1468-2354

pISSN - 0020-6598

DOI - 10.1111/iere.12347

Subject(s) - wage , productivity , workplace safety , panel data , economics , value (mathematics) , labour economics , national longitudinal surveys , occupational safety and health , demographic economics , business , econometrics , medicine , economic growth , pathology , machine learning , computer science

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.

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