NDLI: Compensating Wage Differentials with Unemployment: Evidence from China

Content Provider	Springer Nature Link
Author	Guo, Xiaoqi Hammitt, James K.
Copyright Year	2008
Abstract	We estimate the economic value of mortality risk in China using the compensating-wage-differential method. We find a positive and statistically significant correlation between wages and occupational fatality risk. The estimated effect is largest for unskilled workers. Unemployment reduces compensation for risk, which suggests that some of the assumptions under which compensating wage differentials can be interpreted as measures of workers’ preferences for risk and income are invalid when unemployment is high. Workers may be unwilling to quit high-risk jobs when alternative employment is difficult to obtain, violating the assumption of perfect mobility, or some workers (e.g., new migrants) may be poorly informed about between-job differences in risk, violating the assumption of perfect information. These factors suggest our estimates of the value per statistical life (VSL) in China, which range from approximately US $30,000 to US$ 100,000, may be biased downward. Alternative estimates adjust for heterogeneity of risk within industry by assuming that risk is concentrated among low-skill workers. These estimates, which are likely to be biased downward, range from US $7,000 to US$ 20,000.
Starting Page	187
Ending Page	209
Page Count	23
File Format	PDF
ISSN	09246460
Journal	Environmental and Resource Economics
Volume Number	42
Issue Number	2
e-ISSN	15731502
Language	English
Publisher	Springer Netherlands
Publisher Date	2008-06-17
Publisher Place	Dordrecht
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	China Compensating wage differential Mortality risk Value per statistical life Hedonic wage Environmental Management Economics/Management Science Economic Policy Environmental Economics Environmental Law/Policy/Ecojustice
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics Management, Monitoring, Policy and Law

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