436 Problem Set 6 SU19.pdf - Economics 436 Spring 2019...

This preview shows page 1 - 2 out of 2 pages.

Economics 436 Spring 2019 Sixth Problem Set Due July 16 th I. Many studies have estimated wage equations for occupations that differ with respect to riskiness. A common form used for the equation is lnW = a + bR + cR 2 , where W is the annual wage, R is the fatal accident rate, and the other job and employee characteristics are omitted for simplicity. A. Derive the expression for VSL. B. One actual example, estimated by Viscusi, yields the result, VSL=13.5 - 21.7R, where the wage equation is evaluated at the mean annual wage, R is the fatal accident rate per thousand employees, and the coefficients are expressed in millions of dollars. 1. Viscusi’s equation implies that the value of a statistical life varies with the level of risk, with workers in riskier jobs having a lower VSL. Explain why this result is consistent with economic theory. 2. The average level of risk in Viscusi’s labor market data was R=0.118. What is the value of statistical life implied by his equation at this level of risk?
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '08
  • Staff
  • Million, United States Environmental Protection Agency, Safe Drinking Water Act, VSL

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern