Do Firms Pay for Perceived Risks at Work?

Schmalenbach Business Review, Vol. 53, July 2001

Posted: 13 Aug 2002

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Abstract

The theory of compensating wage differentials is generally accepted. It states that firms have to pay wage bonuses for hazardous work. However, there is as yet no strong or even contrary evidence for compensating wage differentials in Germany. By estimating wage regressions with data from the German Socio-Economic Panel (GSOEP) and using individually perceived hazards of work accidents as a risk variable, evidence that firms do pay risk premiums for hazardous work are found even though other effects could dilute the existing wage bonuses. Taking into account these results, the incentives for German firms to invest in accident prevention are discussed in the context of the existing institutional conditions.

JEL Classification: M12, J28, J31

Suggested Citation

Grund, Christian, Do Firms Pay for Perceived Risks at Work?. Schmalenbach Business Review, Vol. 53, July 2001. Available at SSRN: https://ssrn.com/abstract=304441

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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