The Economic Value of Reducing Fatal and Non-Fatal Occupational Risks in Mexico City using Actuarial- and Perceived-Risk Estimates

Abstract:     
Compensating wage differentials are used to estimate individuals' marginal rates of substitution between income and both fatal and non-fatal occupational-accident risks in the Mexico City Metropolitan Area. Data are obtained by in-person survey of almost 600 workers and include workers' perceived risks of fatal and non-fatal occupational accidents supplemented by actuarial-risk estimates from government statistics. Results using both actuarial- and perceived-risk estimates are reasonably consistent. Estimates of the value per statistical life are between US$235,000 and US$325,000, and estimates of the value per statistical non-fatal injury are between US$3,500 and US$11,000. These values are much smaller than corresponding estimates for high-income countries, but are consistent with the small number of prior estimates for lower-income countries.

Keywords: Health risk, hedonic wages, value per statistical life

JEL Classifications: I18, D18, D69, D81, J17

Working Paper Series