Hazardous Agrochemicals, Smoking, and Farmers’ Differences in Wage-Risk Tradeoffs

This paper utilizes the theory of compensating differentials for job risks from the laboreconomics literature to evaluate farmers’ differences in wage-risk tradeoffs. In thecontext of job risks, the theory predicts that farmers who place a lower value on healthstatus are willing to work for lower compensation on a risky job. The aim of the paper isto evaluate how the observed wage-risk tradeoff is affected by individual heterogeneity inrisk preferences, by acknowledging variations in farmers’ revealed attitudes toward risk,both in job-related and non-job activities. The job risk measure employed is self-reportedjob risk of low back pain, the most recurring health risk faced by farmers. The job-relatedrisky activity is the application of hazardous agrochemicals. The non-job activity issmoking. The primary finding of the study is that individual heterogeneity in riskattitudes is an important determinant of the risk premium workers receive, i.e., individualdifferences in other health-related activities are influential determinants of the observedwage-risk tradeoff.Keywords: