Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26779
Authors: 
Spengler, Hannes
Schaffner, Sandra
Year of Publication: 
2007
Series/Report no.: 
Ruhr economic papers 14
Abstract: 
This paper presents a new approach to obtain unbiased estimates of the value of a statistical life (VSL) with labor market data. Investigating job changes,we combine the advantages of recent panel studies, which allow to control for unobserved heterogeneity of workers, and conventional cross-sectional estimations, which primarily exploit the variation of wage and risk between different jobs.We find a VSL of 6.1 million euros from pooled cross-sectional estimation, 1.9 million euros from the static first-differences panel model and 3.5 million euros from the job-changer specification.Thus, ignoring individual heterogeneity causes overestimates of the VSL, whereas identifying the wage-risk tradeoff not only by means of between job variation (job-changer model) but also on the basis of noisy variation on the job (panel models) may lead to underestimates of the VSL. Our results can be used to perform cost-benefit analyses of public projects aimed at reducing fatality risks, e.g., in the domains of health, environmental or traffic policy.
Subjects: 
Value of a statistical life (VSL)
compensating wage differentials
work accidents
job changes
JEL: 
I10
J17
J28
K00
ISBN: 
978-3-86788-008-4
Document Type: 
Working Paper

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