The Direct Incidence of Product Liability on Wages

Friehe Tim () and Pham Cat Lam ()
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Friehe Tim: Public Economics Group, 9377 University of Marburg , Am Plan 2, 35037 Marburg, Germany
Pham Cat Lam: Public Economics Group, 9377 University of Marburg , Am Plan 2, 35037 Marburg, Germany

Review of Law & Economics, 2025, vol. 21, issue 1, 77-90

Abstract: This paper shows that changes in the product-liability regime influence workforce welfare via an adjustment of the wage resulting from firm-union bargaining. Shifting more losses to consumers increases (decreases) equilibrium wages when consumers underestimate (overestimate) product risk. We highlight an important yet unexplored link between product liability and worker welfare relevant to policy-making.

Keywords: product liability; unions; wages; safety; misperceptions (search for similar items in EconPapers)
JEL-codes: K41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/rle-2024-0120

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