The role of labour market competition in valuing life and in the production of workplace health and safety
Elliott, R. (HERU) Bell, D. (University of Stirling) and Sandy, R. (Indiana University Purdue University at Indianapolis, USA)
The research explored the role of labour market competition in producing healthy working environments. Markets together with laws and regulations can improve the health of the population. Markets can improve the health of the employed population by incentivising employers to provide healthy working environments. In competitive labour markets employers who have dangerous or dirty workplaces will need to pay higher wages; they will face the penalty of higher wages. This research has sought to establish the existence and magnitude of these wages penalties and to understand how these are modified by the presence of institutions, such as trade unions, which seek to reduce risks through regulations.
Central to many resource allocation decisions in the public sector is the question of how much resource society is willing to spend to save a life. This is central to many resource allocation decisions in the health service and in road transport. An estimate of the value that society places on a life saved can be obtained from the willingness of individuals to pay for life saving activities. In the labour market, estimates of employees’ willingness to pay for a life saved can be obtained from estimates of the wage that employees will forgo to work in a safe job.
Elliott, R. and Sandy, R. Long-term illness and wages: the impact of the risk of occupationally-related long-term illness on earnings. Journal of Human Resources. 2005; 40(3): 744-768.