Compensating Differentials for Risk of Death in Australia.

The theory of compensating wage differentials suggests that, for workers with similar human capital and other characteristics, earnings should be relatively high in industries where there is an above average risk of death. Using data from Worksafe Australia, this paper confirms the existence of such differentials in Australia. A worker facing the mean fatality risk would receive between 2.8 and 4.8 percent higher earnings than a worker in a job where there is no risk of death. The lower estimate is similar to that reported by T. J. Kniesner and J. D. Leeth (1991). The estimated wage differentials are used to calculate the implicit value of a life. Copyright 1997 by The Economic Society of Australia.