Does unemployment affect compensating wage differentials for work-related fatal injuries? Empirical evidence from occupational data

Abstract

The study examines the hypothesis that high unemployment rates in local labour markets weaken the bargaining power of workers and reduce the wage premium given to compensate for the risk of death in the workplace. Analysis of fatal occupational injury risk and demographic data from the Bureau of Labour Statistics (BLS) and the Current population Survey (CPS) over 2004 to 2007 finds strong evidence for this hypothesis. Results show that both blue-collar union and nonunion workers are likely to receive a lower wage premium in locations where unemployment rates are high. They also indicate that the compensating differentials for fatal injury risks are larger for union workers than those of their nonunion counterparts.

Keywords:

• wage differentials
• injury risk

JEL Classification:

• J31
• J28

Acknowledgements

Thanks to seminar participants at the North Carolina Central University and to Keith A. Bender for helpful comments on earlier drafts of the article.

Notes

¹ The CFOI fatal injury rates published by the BLS for the years 1992 through 2007 are employment-based and measure the risk of fatal injury for those employed during a given period of time, regardless of hours worked.

² The rate represents the number of fatal occupational injuries per 100 000 employed workers and is calculated as (N/W) × 100 000, where N = the number of fatal work injuries and W = the number of employed workers.

³ Certain occupations or administrative jobs, such as teaching, accounting and auditing, have low fatal risks but are highly paid.

⁴ The US Census Bureau reports on 362 metropolitan statistical areas (MSAs) in the country.

⁵ These estimates are available upon request from the authors.

⁶ It is not uncommon to find insignificant CWDs for women (see Bender and Mridha, 2011).