Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 0453: Estimating Compensating Wage Differentials from Worker Mobility

Per Johansson () and Mårten Palme ()
Additional contact information
Per Johansson: IFAU - Office of Labour Market Policy Evaluation, Postal: SE-751 20 Uppsala, Sweden.
Mårten Palme: Dept. of Economic Statistics, Stockholm School of Economics, Postal: P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: We estimate the effects of the implementation of a compulsory work injury insurance in Sweden in 1978 on compensating wage differentials. This involves two steps. First, we investigate if there are compensating wage differentials on the Swedish labor market and second, we assess if these were altered by the reform. We use panel data for the period 1970 to 1990 with annual information for a sample of blue collar workers. The econometric model departs from the worker's job mobility decision. Endogeneity, selection and measurement errors of risk exposure are considered in the estimation. The estimates show significant compensating wage differentials for work-related diseases in the female sub-sample. No significant effect of the reform was found.

Keywords: Work injury insurance; Panel data

JEL-codes: J24; J28; J31; J32; J62

39 pages, June 16, 2001

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