Wage compensation for dangerous work revisited

Using data from the 1982 Panel Study of Income Dynamics (PSID), the authors investigate the relationship between wages and the risk of work-related death or nonfatal injury. Including industry-level variables and using alternative risk measures dramatically affects measured wage compensation. The results cast doubt on the existence of compensating differentials for risk. Indeed, the strongest finding is the likely presence of negative compensation-relatively high risk and low wages-for nonunion workers. The role of rent-sharing or other forms of strategic bargaining behavior (captured by value-added per worker and other industry variables) and the gender distribution of both risk and wages demonstrate that noncompetitive elements in U.S. labor markets are sufficiently strong to overcome the competitive tendency toward equalizing differentials.