Risky Production Processes and Demand for Preventive Safety Measures Under Uncertainty

Carmela Di Mauro ()

The Geneva Risk and Insurance Review, 1994, vol. 19, issue 1, 35-51

Abstract: This paper analyzes the behavior of a competitive risk-averse firm that has to choose the optimal level of labor and preventive safety measures. If the firm's injury function includes a random component, then the firm is characterized by a lower demand for labor and by a higher demand for safety measures with respect to a firm whose injury risk is completely under its control. The comparative statics show that shifts in the parameters of the risk distribution will have effects that depend on the absolute risk-aversion functions. The introduction of safety standards will prompt a reduction in the demand for labor while a tightening of the compensation system will have ambiguous effects on the demand for the two inputs. The Geneva Papers on Risk and Insurance Theory (1994) 19, 35–51. doi:10.1007/BF01112013

Date: 1994
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.palgrave-journals.com/grir/journal/v19/n1/pdf/grir199448a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/grir/journal/v19/n1/full/grir199448a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:genrir:v:19:y:1994:i:1:p:35-51

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10713

Access Statistics for this article

The Geneva Risk and Insurance Review is currently edited by Michael Hoy and Nicolas Treich

More articles in The Geneva Risk and Insurance Review from Palgrave Macmillan, International Association for the Study of Insurance Economics (The Geneva Association) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().