wage-fatality risk tradeoffs
Labor Economics | Medicine and Health Sciences
We examine the incidence, form, and research consequences of measurement error in measure of fatal injury risk in United States workplaces using both BLS and NIOSH data. We find evidence of substantial measurement errors in the fatality risk researchers attach to individual workers when estimating the implicit price of risk and the value of a statistical life. We first examine possible classical attenuation bias in the fatality risk coefficient. However, because we also find non-classical measurement error that differs across multiple risk measures and is not independent of other regressors, more complex statistical procedures than a standard instrumental variables estimator need be applied to obtain statistically improved estimates of wage-fatality risk tradeoffs. We conclude by noting that the National Institute of Safety and Health’s industry risk measure produces implicit value of life estimates much more in line with the mode for the existing literature than other risk measures.
Black, Dan and Kniesner, Thomas J., "On the Measurment of Job Risk in Hedonic Wage Models" (2003). Center for Policy Research. Paper 181.
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