Compensating wage differentials

Kniesner, T. J. and Leeth, J. D. (1991). Compensating wage differentials for fatal injury risk in Australia, Japan and the United States. Journal of Risk and Uncertainty, 4, 75-90. 

For Marx, market transactions occupy a middle layer in the hierarchy of capitalist social relations the injustice of the system becomes apparent only below and above it, within the coercive production process by which labor-power, the ability to work, is transformed into actual labor, and at the level of the entire structure, where surplus value is transformed into profit. Although Marx disputed the invisible hand postulate on the grounds that day-to-day price fluctuations are not an adequate guide to production and distribution, he never claimed that market relations themselves are responsible for exploitation. The grisly record of injuries and diseases in British factories impressed Marx as characteristic of capitalist production - workers as raw material for the owners to use up - yet his bifurcated vision crippled Marx when he confronted Smith on this issue. The theory of compensating wage differentials pertains to the labor market, that realm of Freedom, Equality, Property and... 

If there were a single labor market, in which workers could compete equally for all available jobs, and if all jobs were identical except for the risk involved, all we would need to know in order to estimate compensating wage differentials would be the riskiness of each job and how much it pays. Of course, these assumptions are not valid so we need to know a great deal more. To correct for the fact that there are many labor markets we need to know more about worker characteristics from these we can determine which jobs make up each worker s reference set (alternatives for comparison). Since jobs differ in many ways other than safety, and since these differences are correlated with safety (as we saw in chapter 1), we should also incorporate more job attributes in our analysis. ... 

Table 3.4 Selected tests of compensating wage differentials...

One possible explanatory factor which has not made much of an impression is compensating wage differentials for hazardous or otherwise undesirable work. Dickens and Katz (1987), for instance, worked on a large scale they pooled twelve consecutive monthly surveys from the CPS and incorporated, in addition to the standard fare, a long list of variables most other studies have ignored the percentage of an industry which is black or female (to pick up the effects of discrimination that... 

The moral the theory of compensating wage differentials is based on a... 

Let us return once more to the two worlds of occupational safety and health - the world of conflict, regulation, fairness and unfairness as seen by the general public and that of compensating wage differentials. 

We are now in a position to ask whether workers will receive compensating wage differentials in the presence of unemployment. The following model suggests some surprising answers. As in chapter 2 we will assume that all workers are identical in both preferences and abilities. 

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