![]() ![]() VSL estimates were used to calculate the value of a statistical life year. International estimates were adjusted for income differences and the median VSL estimate was extracted from each review study. A systematic literature review was conducted to capture Australian primary studies and international review papers reporting VSL estimates published from 2007 to January 2019. #Hedonic wage update#This study reviewed the literature to update the VSL recommended for Australian policy appraisals. This economic parameter is often a major component of the quantified benefits estimated in the evaluation of government policies related to health and safety. The value of a statistical life (VSL) estimates individuals’ willingness to trade wealth for mortality risk reduction. The simulations reveal how regulations incent some workers to take more dangerous jobs, while workers’ compensation insurance does not (or less so). Using a reasonable set of primitives we see that job safety regulations are much more limited in their potential for improving workplace safety efficiently compared to mandatory injury insurance with experience rated premiums. To demonstrate the additional usefulness of giving detail to the underlying structure we not only develop the issue of welfare comparisons theoretically but also illustrate how numerical simulations of the underlying structure can also be informative. Simulations of hedonic market outcomes are also valuable research tools. Additional econometric results described are the multiple dimensions of heterogeneity in VSL, including by age and consumption plans, the latent trait that affects wages and job safety setting choice, and family income. Estimates of the overall hedonic locus we discuss imply the so-called value of a statistical life (VSL) that is useful as the benefit value in a cost-effectiveness calculation of government programs to enhance personal safety. We focus on the application where hedonic models have been most successful at clarifying policy relevant outcomes and policy effects, that of the wage premia for fatal injury risk. Our emphasis is on how the researcher approaches economic and policy questions when there is labor market heterogeneity leading to a set of wages. We examine theoretically and empirically the properties of the equilibrium wage function and its implications for policy. ![]()
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