Skill and the Value of Life
Jason F. Shogren
University of Wyoming - College of Business - Department of Economics and Finance
Norwegian School of Economics (NHH) - Department of Finance and Management Science
Journal of Political Economy, Vol. 110, 2002
The value of statistical life (VSL) can be inferred through real-world wage-fatality risk trade-offs made across different occupations. This paper shows that the VSL based on the wage-risk trade-off tends to be biased upward if it does not account for the diversity of workers; unobservable skill to cope privately with job risk. This upward bias arises because the highest required wage differential among the workers is divided by their average risk across the population.
Accepted Paper Series
Date posted: November 11, 2002
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