The Value of a Statistical Life by Race and Ethnicity

Abstract

There is substantial heterogeneity in the rate of compensation that workers receive for fatality risks. The wage-risk tradeoff rate given by the value of a statistical life (VSL) is about $14 million (2022 USD) for workers generally, but it could be higher or lower than the average amount depending on worker preferences and job opportunities. This article finds that Black workers have a VSL below the national average based on several different specifications. The extent of the estimated difference depends on the degree of refinement of the fatality risk measure. Furthermore, the results suggest that Black workers do not face the same wage offer curve as do White workers; instead, Black workers appear to face an offer curve that is both shifted lower and flatter than the offer curve for White workers. In contrast, Hispanic workers consistently have a VSL that is above the national average, and there is no evidence in the full sample to suggest that Hispanics face a different wage offer curve than non-Hispanics. The results are borne out using two different fatality risk measures and based on either the general labor market or restricting the analysis to blue-collar workers only.

Keywords: value of a statistical life, compensating differentials, fatality risk, race, ethnicity, Hispanic

JEL Classification: J14