Compensating wage differential and value of statistical life: a meta-analysis
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The analysis of safety and health regulations often involves assigning a monetary value to the reduction of fatal risks to health. This is done based on how people are compensated for undertaking various risks. Compensating Wage Differential (CWD) for job risks is key when valuing fatality risks. The Value of Statistical Life (VSL) acts as the foundations when analysing the benefits of various risk reduction policies of the government. However, VSL estimates are observed to vary considerably across various studies. The source of this variability must be understood to guide present and future policy-making endeavours. This article presents a meta-analysis based on 34 observations from 30 VSL studies, which have used the hedonic wage method to estimate VSL. This meta-analysis suggests that the emerging areas, such as the effect of a worker’s age, compensation benefits and long-term, health-related job risks need to be explored further when estimating the VSL.
KeywordsValue of statistical life Compensating wage differentials Hedonic wage method Meta-analysis
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