Measuring job risks when hedonic wage models do not do the job

Susana Ferreira, Sara Martínez de Morentin and Amaya Erro-Garcés

Journal of Environmental Economics and Management, 2025, vol. 130, issue C

Abstract: The theory of compensating differentials predicts that wages should compensate for differences in job characteristics, including the risk of death on the job. Empirically estimating these compensating differentials in real-world labor markets has, however, proven difficult. This paper explores the potential of job satisfaction regressions as an additional valuation approach to estimate the tradeoffs between wages and job amenities along the wage-amenity frontier. In this approach, job satisfaction scores act as a proxy for utility at work, and can be used to directly estimate the tradeoffs between wages and amenities at the job taken by the worker. Conventional hedonic wage regressions with data on thirty-five thousand workers across thirty European countries show limited evidence that European workers facing larger job risks and other workplace disamenities receive higher wages. On the other hand, using the same data, workers who perceive their jobs to be riskier, are absent more days from work due to work accidents, or are exposed to worse conditions at their workplace are less satisfied with their jobs, ceteris paribus, revealing a negative valuation of those job disamenities.

Keywords: Job amenities; On-the-job risk; Experienced preference; Job satisfaction; Hedonic wages; Stated preference; Value of a statistical life (search for similar items in EconPapers)
JEL-codes: I12 I18 J17 J31 K32 Q51 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Measuring Job Risks When Hedonic Wage Models Do Not Do the Job (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:130:y:2025:i:c:s009506962500004x

DOI: 10.1016/j.jeem.2025.103120

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