This article measures compensating wage differentials for job risks for union and nonunion workers. Job risk is made endogenous to avoid a selectivity bias arising if more able people choose safer jobs. We find that this adjustment has a considerable effect on the union group, raising their fatal risk premium above that of non union workers. This implies that there is more variation in unmeasured ability in the unionized group, and that job risk is an inferior good. The fact that unionized workers are also found in safer jobs might therefore be attributable to their greater wealth, rather than to greater“knowledge” in the unionized plant. The estimated statistical value of a life is £8.8 million in 1990 prices for union workers, with nonunion workers about 20% lower.
- Workplace accidents
- compensating wage differentials