This paper estimates workers' demand function for job safety using the 1973 British General Household Survey data. The estimation employs Rosen's two-stage procedure. The main difference between our study and those done in the past is that we estimate hedonic price equations with data sets from two separate markets. Our approach overcomes the usual identification problems associated with the application of Rosen's method.
The estimation shows that there is a significant wage compensation for job risk in the UK. The willingness-to-pay for a 1/100,000 increase of annual job fatal accident rate from our estimated workers' demand function is about £6 in 1973 price. The estimation of demand function for safety also enables us to derive workers' willingness-to-pay for non-marginal change of job risk, and therefore can be used for cost-benefit analysis on projects involving such non-marginal changes.
Wei, X. (1997). Estimating British workers' demand for safety (CPPS Working Paper Series No.70). Retrieved from Lingnan University website: http://commons.ln.edu.hk/cppswp/37/