This paper develops a multi-period Markov model of the lifetime choice of occupational fatality risks. The empirical model analyzes the wage effects of job risks using the 1982 University of Michigan Panel Study of Income Dynamics in conjunction with death statistics from the U.S. National Traumatic Occupational Fatality Survey. Evidence regarding workers' intertemporal choices with respect to risks with long-term implications is broadly consistent with rational behavior. Workers' implicit real rate of time preference with respect to future life years equals approximately 11 percent. This rate of time preference decreases with education.
ASJC Scopus subject areas
- Economics and Econometrics