Estimating British workers' demand for safety

This paper estimates workers' demand function for job safety using the Brit ish General Household Survey data. The estimation employs Rosen's two-stage procedure. The main difference between our study and those done in the pas t is that we estimate hedonic price equations with data sets from two labou r markets. Our approach overcomes the usual identification problems associa ted with the application of Rosen's method. The estimation shows that there is a significant wage compensation for job risk in the UK. The willingness -to-pay for a 1/100 000 decrease of annual job fatal accident rate from our estimated workers' demand function is about pound 6 in 1973 prices. The es timation of a demand function for safety also enables the derivation of wor kers' willingness-to-pay for non-marginal change of job risk, and this can be used for cost-benefit analysis on projects involving such non-marginal c hanges.