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Do You Think Your Risk Is Fair Paid? Evidence From Italian Labor Market

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Executive Summary

Starting from Adam Smith's intuition, compensating wage differentials are one of the most widespread explanations to describe why agents should bear occupational risk of injury and death. For nearly thirty years, economists have attempted to find empirical evidence on such wage differentials mostly relying on estimation of a simple wage equation. This paper claims to put one step forward. Using the Survey of Household Income and Wealth (SHIW) 2004 the authors estimate for Italy the wage premium held by workers in risky occupations by means of the matching estimator. Such technique is desirable because it attempts to remove all the differences in wage coming from heterogeneity across individuals and not directly imputable to risk.

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